Today, January 15th is a crucial day for crypto market as the conspiracy around the use of USDT stablecoin by Tether and its alleged relationship with crypto exchange Bitfinex is catching up the heat. Tether is once again in the limelight because the stablecoin issuer has pumped an additional $4.2 billion worth of USDT coins in the market over the last month.
The Tether Conspiracy and Bitfinex’s link?
Now, the demand for stablecoins on the exchanges has surged massively due to the huge trading volumes following the recent market rally. However, this brings us back to look into the fact that whether institutional investors are really behind this Bitcoin price rally, giving rise to the conspiracy about Tether’s involvement in pumping BTC by sourcing the USDT coins during the crypto market rally in December 2017.
Now, you might be wondering what’s so special about today? Before we speak about it, let’s take a look at the timeline of events from the past.
- Back in April 2019, the New York Attorney General (NYAG) accused stablecoin operator Tether of covering Bifinex’s $850 million losses by sourcing its USDT to cover the shortfall. However, Tether replied calling this accusation in “bad faith” and “riddled with false assertions”. Note that NYAG has filed charges against iFinex, the parent company of Bitfinex and Tether.
- During the preliminary injunction in May 2019, Judge Joel Cohenextended the deadline to 90 more days. By August 2019, NYAG presented another proof and evidence in the case highlighting how Bitfinex and Tether were allegedly involved in covering up the $850 million losses. Later, the NYAG also called out iFinex’s motion “an improper attempt to impede a lawful investigation”.
- The case took an interesting turn last year in September 2020 when Judge Cohen ruled that both Tether and Bitfinex should produce documents disclosing their financial relationship. Besides, he also passed an injunction barring Tether to issue loans to Bitfinex by 90 more days.
- Last month on December 9th, 2020, Attorney General Letitia James filed a document requesting Judge Cohen to extend the timeline to January 15. The Attorney General said that “the parties continue to cooperate on the production of documents in response to the 354 Order, and anticipate that the production could be finalized in the coming weeks.”
- Today is January 15, the d-day for iFinex as it has to produce the documents and necessary information so that NYAG can continue the investigation further. iFinex has to produce documents detailing the issuance and redemptions of Tether’s USDT stablecoins as well as disclose the trading activity on Bitfinex concerning USDT and Bitcoin.
We are currently at the crossroads on unearthing the details about one of the most important cases in the crypto space. While that we await the developments ahead in the day, let’s take a look at what’s happening around.
Latest Development Around Tether’s USDT Issuance
Recently, a crypto trader that goes by the name Santiago Capital on Twitter, has raised concerns over the process of wiring USDT/funds in-and-out of Tether through The Bahamas-based Deltec bank. The trader has raised questions about the discrepancy with the Bahamian bank inflow/outflow numbers.
Santiago raises some valid questions as to why money is processed through Deltec or any other correspondent banks of Tether. Read the entire threat below to understand more about it. This is a conversation between Santiago Capital and FTX CEO SBF.
TBH this is probably why there's the discrepancy with the Bahamian bank inflow/outflow numbers now that I think about it
— SBF (@SBF_Alameda) January 13, 2021
In another thread, Santiago Capital had a conversation with one of the bankers Gregory P. at Deltec Nassau, Bahamas Brach. Santiago requested Gregory to furnish details about wiring instructions for USD fiat in the Deltec account. However, Gregory has refused to furnish the details to those who are not customers of Deltec.
Santiago thanks for your interest in Deltec. We have multiple corresponding bank for multiple currencies. Like any process for any bank when you receive funds in foreign currency to your native licence (even as a domestic or international bank) you will use corresponding bank for
— Gregory P. (@dzrgreg) January 14, 2021
While questions have been raised about Deltec’s alleged relations with Tether, it happens that the Deltecbank themselves are holding a huge position in Bitcoin. Well, the case is getting a lot more interesting and it seems that Tether could be possibly using The Bahamas route while not maintaining transparency on using their funds. However, before making any conclusions we would wait to know any official stand in the matter.
7:20 in the video Deltecbank has a "large" position in bitcoin, but Tether absolutely has nothing to do with it, right ? @BennettTomlin @CasPiancey But great to hear tethers other assets also did well in 2020. https://t.co/xbT9bSR6wt
— lenne (@lenne0816) January 14, 2021