The scandal around the connection, the largest cryptocurrency exchange Bitfinex and the project «virtual dollars» Tether (tokens USDT and EURT) broke out in November last year. However, despite the fact that discussions begin to subside, the crisis continues to evolve, and its isolation may lead to events before which will fade even the collapse of MtGox, which occurred four years ago.
Doubts about the adequacy of security real foreign exchange reserves of tokens USDT appeared a few months before beginning wide-ranging discussions, however, since the beginning of December, the events began to gain momentum.
The first scandals
In early November 2017 were published Paradise Papers is the materials of investigative journalism, exposing a variety of offshore schemes, money laundering elites of different countries. Mentioned among them and Tether, and Bitfinex.
In particular, according to these documents, the Tether company Ltd was opened in 2014 in the British virgin Islands by two persons: Phil Potter (now the strategic Director of Bitfinex), and he Dewaine (now CFO Bitfinex). Another document claims that Bitfinex CEO Jean-Louis van der Velde — is both CEO of Tether. Of course, these documents officially, no one has found reliable, but they are awakened in the community, serious doubts.
After reports about the hacking of the Tether 21 Nov and steal tokens by 31 million dollars by an unknown hacker, the attention of the cryptocurrency community was confined not only to the tokens Tether, and the Bitfinex team. After some time there appeared numerous articles and reports accusing both companies in operations unsecured tokens and stock manipulation.
In most Bitfinex deny the charges and even going to sue the anonymous users criticizing the exchange. Specialist exchange public relations Ron Torossian 1 Dec wrote:
«Bitfinex is committed to become the most transparent cryptocurrency exchange in the industry. The company is managed by a strong team of managers, among them CEO Jean-Louis van der Velde, Director of strategic issues – Phil Potter, chief financial officer – he Dewaine».
It should be noted that Torossian did acknowledge the existence of a relationship between companies Tether and Bitfinex. And now no reason to doubt no longer: van der Velde, Harry Potter and Devozine in similar posts already published on the website of the Tether. Thus, the Tether and Bitfinex, despite his previous denials, and defaults, have a common leadership, and hence their activities are linked much more closely than had previously tried to represent both companies.
In mid-December 2017 user under the name Bitfinex’ed, known for his criticism of the exchange, which runs the risk of becoming the main victim of prosecution, noticed important in his opinion the part that can indicate the presence of Bitfinex and/or Tether problems with the law. Detail this refers to the Twitter account of an employee of the exchange of Chris Ellis (Chris Ellis), which lost symbol Canaries (warrant canary).
The absence of this symbol generally means «can’t talk and can’t say for some reason forced to remain silent». This technique usually is used when talking about any event prevents the agreement on confidentiality (Non-disclosure agreement, NDA). Thus, the Canary allows a public entity to give the signal that something important is happening, but due to legal technicalities to talk about it at the moment impossible.
Attentive users of the website Reddit, where there is a discussion
the events described above, I noticed that a Twitter account of Chris Ellis «silent» on 4 December, the day after his interview with the community of traders WhalePool, in which Chris explained how there is a transfer of tokens from the Tether to Bitfinex and how the funds were stolen from the hot wallet.
According to the programmer, the attacker was able to access the wallet via the RAM on the server where the private key is stored unencrypted. The interview is available here.
One of the last entries in the Twitter of Chris is:
«Main wallet with multipages not been hacked. Hot wallet Tether which was hacked, had the address 3BbDtxBSjgfTRxaBUgR2JACWRukLKtZdiq was a purse with multipages type 1:1 that requires only one signature. E-wallet hacker — 31okFF1rUu8jjPEVuajycTRBp82Nteo4mv. Within 24 hours the funds were frozen. The hacker was able to perform only one translation.»
Eventually, the tokens were indeed transferred only once, and end address 16tg2RJuEPtZooy18Wxn2me2RhUdC94N7r, which is now 30 950 000 USDT marked in the browser blocks Tether as «frozen».
The last comment left by Chris:
«No Bank will give cryptocurrency businesses such a lot of money. Tether is not a very profitable company, but they receive interest on deposits when depositing and withdrawing funds».
Mad printer: Tether «stamps» tokens USDT already in the billions
IFinex Inc, the company that manages the Bitfinex team is under banking sanctions on Taiwan, with the first half of 2017, and the number of Tether tokens in circulation and growing, makes you wonder about the reason of their origin, as well as to make all tokens issued Fiat money.
The number of Tether tokens in recent months, growing just astronomical pace. At the beginning of 2017 was released only about 15 million USDT, as of December 1, 2017 number of tokens increased to 800 million! On December 17 tokens total capitalization has reached $1 billion At the time of publication 27 January 2018, it has already exceeded $ 2 billion.
What Tether need to produce so many tokens?
Tether trying to delay the collapse Bitfinex?
Bitfintex is the world’s largest on turnover in dollars bitcoin exchange registered in the British virgin Islands, which offers exchange and margin trading several major crypto-currencies and tokens. Daily traded value for all pairs is 1.5-2 billion USD.
Reviews about Bitfinex has always been controversial. Founded in 2014, the exchange is not less than two years is constantly in the top five largest in the world, but in August of 2016, Bitfinex hacked, and $72 million in bitcoin (BTC 120 000) was stolen. Soon after breaking Bitfinex created tokens BFX, which were used to refund the stolen capital to customers, and in April 2017, representatives of the service have announced that all tokens BFX redeemed by the exchange or third-party investors and, accordingly, all the lost users funds paid.
But now works around Bitfintex there’s a new controversial circumstances. In connection with the shortage of dollars on the stock exchange are increasingly used USDT, while the turnover of these dollars with the banks virtually stopped. Tether (USDT) is the first of its kind project, which in theory provides the ability to use Fiat money as collateral the equivalent of a digital token. Consequently, the Tether should have 100% support of their tokens, i.e. to redeem 1 USDT 1 USD, and 1 EURT respectively per 1 EUR (as the number of EURT is less than 1% of the volume of USDT in the following we will talk only about the dollar tokens).
The developers have stated that this technology will allow to provide transparency of transactions in public network. We can say that this approach is intended to ensure the stability of the quotes of the token. But is this, or in fact, the project now operates as a means of money laundering and postponement of insolvency of the exchange?
Due to the fact that the Tether tokens are issued on the Omni Layer platform implemented as an add-on bloccano Bitcoin, all transactions are free. That’s how many tokens were flooded the market since the beginning of this year, and inevitably there is an assumption that there is a desperate effort to postpone the inevitable insolvency of Bitfinex. Let’s look at these numbers is available in the browser Omnichain on the main emission USDT address:
January 23 – $100 000 000
January 21 – $100 000 000
January 20 – $100 000 000
January 19 – $100 000 000
January 18 – $100 000 000
January 17 – $100 000 000
January 16 – $100 000 000
January 15 – $100 000 000
January 14 – $50 000 000
January 4 – $100 000 000
Total, in less than a month Tether released USDT for a total of $950 million Yes, it is nearly a billion virtual dollars essentially created out of nothing in a few weeks. After January 23 issue USDT stopped.
Note the fed
Note that the US government is printing banknotes every day about $541 million, and 95% of them simply replace the old and worn notes, so the actual amount of new paper money coming into circulation, is $27 million a day. Consequently, for the first 20 days of January 2018 by the United States government was printed 540 million of new dollar bills (here we do not consider the creation of a non-cash$, which are produced in a much larger scale).
The result is that the Tether has released a $950 million, and the U.S. government, in turn, only $540 million In a single month in 2018 Tether released the equivalent of USD more than printed by the US government.
Awesome: an anonymous company registered in the offshore, produces your dollars faster than the Federal reserve! How Tether can so quickly increase the volume of their tokens, in other words — their dollar reserves? Because the Tether website stated that all issued tokens are supported by the dollars that are in reserve accounts of the company.
Why you need massive acceleration issue USDT?
So, at the end of last year, Tether (perhaps, rather to say — Bitfinex?) was the «clone» USDT in batches of $25 million, then at $50 million, and in January already $100 million almost every day! «Mad printer» sold is not a joke — apparently, the exchange desperately needs money and is trying to cover its growing deficit weight of no real value tokens.
«Buying and selling of Tether: the Website is a medium for buying and selling Tethers. If you have Tethers, you can exchange them to store or pay them with those who are ready to make Tethers. However, Tethers are neither money nor monetary tool. They also have no real monetary value.»
In the United States and EU countries, such outrageous statements are punishable by financial regulators, but in the virgin Islands is probably valid. The actual value of the Tether equals zero, and the holders of the tokens there is in fact any present legal claim to the organization. That’s why they can print as many of these tokens.
After American regulators began to require registration of cryptocurrency companies and reporting to stock exchanges fell on hard times. The largest by market capitalization in the world and the fourth largest Bank in the U.S. Wells Fargo in March of 2017 broke the connection with this company and subsequently closed her account. Almost simultaneously with Bitfinex and other cryptocurrency exchanges stopped working and Taiwanese banks.
By the end of 2017 Bitfinex was forced to stop working in USA and use small banks elsewhere in Asia to accept deposits from customers around the world. In addition, from 1 January 2018 was discontinued the sale of tokens Tether clients in the United States.
Where does all the money go?
One of the theories is that the exchange no longer real money because the owners Tether and Bitfinex already depleted account and transferred all the money in offshore banks (e.g., aware of such leak, in Panama). And now they’re just waiting for market collapse Tether, which no more Fiat money to ensure the physical value of the token. This assumption could be supported, for example, data of quarterly reports or other available documents about the activities of the company, but, unfortunately, this is not possible.
Meanwhile, the website of the Tether is specified, the largest holder of tokens, using them as a replacement of the dollar:
So, only the five largest cryptocurrency exchanges — Binance, Bittrex, Huobi, Poloniex and OKex uses 1.5 billion tokens USDT, and it’s mostly the money of their clients. At the same time she has on Bitfinex accounts for less than 3% USDT.
What happens to the cryptocurrency market, if Tether will not be able to prove the security of their tokens? At least five of the largest exchanges, altcoins will suffer huge losses, and may just collapse. Perhaps this is the calculation: to show that the Tether system has become too big to fail, not pulling the whole market? That no one even tried to get them to clean water, for fear of even more disastrous consequences?
But, says a famous Russian proverb, «how much string to be twisted, and the end will be.» It is impossible to indefinitely and uncontrollably increase the amount of Fiat tokens — sooner or later they will be presented for payment. But how reliable are the promises of the Tether and how big is its real responsibility? Unfortunately, the answer is very unpleasant but obvious: in the event of bankruptcy Tether invested in USDT dollars for no return. They will simply disappear. The bubble will burst, shaking the entire industry and brought down the capitalization of all cryptocurrencies.
You still doubt that Tether to reality would not respond and does not guarantee anything? Then check out the official contact page and try to contact them:
Here there is no information on the registration data of the organization, no phone, no address. Nothing. You have no way of knowing who is behind the sale of these «magic coins» because the only information you can get, is that they have affiliation to Hong Kong «incorporated in Hongkong» and some offices of the company located on the East coast in the United States «have offices in the US on the East Coast».
So, this mysterious offshore company at the moment supposedly holds billions of dollars in their accounts and even trying to give it all for serious business.
However, not all so sad. Holders USDT can still contact the people who run Tether — in other words, the leadership of the exchange Bitfinex, as they are one and the same person. But if they have two billion dollars?
Was there an audit?
Of course, all doubts were dispelled by independent third-party audit, as the dollar, in contrast to the cryptocurrency should be in Bank accounts, and their actual availability to present relevant evidence to the auditors is easy.
However, in recent months Tether ignored the pleas of the audit. The last official report on the audit on the website, Tether refers to the end of March, and according to him, the accounts of the companies is only 44.7 million dollars. Although as at 15 September audit firm Friedman LLP has confirmed the availability of reserves in the amount of $442 million. However, posted on the site report edited — in particular, they hide the names of the banks which placed funds Tether. This report is hard to call truly transparent. But the money will not cover the significantly increased number of tokens.
A few days ago the story of the audit received an unexpected continuation. According to reports in the media, the Tether broke with Friedman LLP, accusing it of delaying the process. Discontinuance with Tether confirmed by the auditing company. Therefore, the audit of which the community has been waiting for several months again postponed for an indefinite period, as on the invitation of other auditors Tether is announced.
The same question: is there a Tether on accounts 2.25 billion dollars? Undoubtedly, it is of concern to everyone who uses the tokens USDT/EURT or trades on Bitfinex and dozens of exchanges, where USDT replaces the dollar. It seems that in the near future a full open audit of the financial state of the Tether is not expected.
Tether trying to maintain some transparency as to hide the data in the blockchain is useless: they see everything, issuance and initial distribution of tokens is impossible to hide. So, at the moment announced the presence in the circulation of 2.25 milliard USDT (including stolen $30.95 million), and 14.5 million EURT. But what happens if you suddenly have a latter-day Charles de Gaulle and will require you to immediately pay him several hundred million real dollars in exchange for USDT?
Users waiting for the money
It is obvious that this whole scheme is held only as long as Bitfinex and Tether do not have to deal with the demand large payments in dollars. When a large number of owners of the cryptocurrency suddenly try to withdraw their money from Bitfinex, the whole business will collapse, because the real reserves to cover the cost of all USDT most likely does not exist.
And such a development is not excluded. Many users of the exchange in the subreddit /r/bitfinex report that they can’t get their money for a variety of reasons: frozen accounts, missing deposits, etc. And at the moment has accumulated a lot of claims of desperate and unhappy customers:
Today, the cryptocurrency exchange Bitfinex can offer its users with quite a lot of various options of input and output assets. But too often the payment ceased to be delivered. Among the many messages there are that «funny» requests to the exchange to conduct an audit and finally to prove their worth. But will they answer?
View primarily on the user, early investor in cryptocurrency, a legitimate way to earn $1 million that Bitfinex does not want to return it back, claiming that the money was stolen from another user: “His money have been stolen from another user”. After several weeks of correspondence with the support account was never unlocked.
Even if the user has at hand all the documents about the origin of the funds, if he has any guarantees for their return? In fact, they are not. After all, he’ll have sue some offshore company, which is already possible and did not have money. If they are, how can there be so massive and unjustified delays in payments? Too much is said about the deplorable financial situation Bitfinex.
The moment of truth may be close: the CFTC has sent subpoenas to Bitfinex and Tether
As it became known on the evening of 30 January, the Commission commodity futures U.S. (CFTC) sent the subpoenas Bitfinex and Tether, which asks them to give an explanation on the token tied to the U.S. dollar. Details of the contents of these agendas are unknown, and all parties waive further comment.
Despite the fact that the agenda was sent on 6 December, it has become known only now. However, the fact that the attention of US regulators to work these companies speaks for itself. And despite the fact that the request explanation does not provide any direct threats to Tether and Bitfinex, the market reacted rather nervously: bitcoin continues its downward trend and fell below $10 000, with fairly significant volumes. Final scrapping of bullish trend in November-December last year, may drop bitcoin for a few thousand dollars, next the strong psychological and technical boundaries are between $8000 and $7000.
How to make money on the tokens
Now let’s talk about what’s new and interesting brought to Bitfinex cryptocurrency industry. It marked the beginning of Bitfinex virtuoso tokenization losses. The only way to call the operations that the exchange «did» after the aforementioned robbery on 2 August 2016. Their legitimacy can be called questionable, and yet the exchange was not to cross the fine line beyond which it would wait for the numerous lawsuits from customers.
So, tokens BFX was created after the socialization of the losses incurred by the exchange as a result of the robbery. All the stolen bitcoins have been restated at the exchange rate at the time of stopping the trade (about $604), and from the accounts of all users were charged 36% of the funds in all currencies, but instead they were enrolled tokens BFX the equivalent amount in dollars. At the same time were opened of a trading pair on these tokens. Users some time resented the actions of the exchange, but soon calmed down, because the alternative was closure and long judicial process like bankruptcy MtGox.
A similar maneuver Bitfinex killed several birds with one stone and considerably accelerated repayment of debt:
In the first weeks after the release of the tokens were traded several times below par, and the stock could redeem them at a price of 0.25-0.3$, taking from each a token decreased by$1.
Trade BFX as other instruments subject to trading commissions, and based on the volume exchange only they received tens of thousands BFX per day.
Part tokens in closed session was allegedly sold to third party investors, but it is impossible to prove. These tokens could be, for example, is repaid through the additional issue of USDT.
For the foregoing reasons, the exchange in 8 months fully redeemed all BFX, closing indebtedness and consolidated his reputation. Such a scheme tokenization loss a year later used the exchange WEX (formerly BTC-e). You need to recognize that the actions of Bitfinex in this situation, you can not confidently be called illegal, if later will not emerge now unknown details — rather, they talk about the «ingenuity» of the leadership of the exchange, to shift liability for damages to its users.
Simultaneously with BFX was launched RRT tokens that will be redeemed for$ 1 in the case that the exchange will be able to recover the stolen funds. Hope to be illusory, nevertheless, the stock exchange and earns a little on the trade in these tokens.
Another invention Bitfinex on the part of the token steel Chain Split Tokens (CST), created by the stock exchange as betting on the winner in case of hard forks of Bitcoin (Bitcoin Unlimited, Segwit2x Gold and Bitcoin). Despite the complete absence of practical value, exchange some money and on these tokens. The first CST was established in March 2017, and completely closed in December.
However, besides these innocent pranks, in Bitfinex there were other moments that allowed the exchange of «relatively honest» to pull users some amount of money.
A hundred old women — already the ruble: where did the 15% BCH?
Cryptocurrency Bitcoin Cash (BCH) was the result of hard forks (separated from the Bitcoin blockchain) August 1, 2017. Some exchanges, including Bitfinex, enrolled BCH to balance almost immediately and the rest within a few weeks after hard forks. But there is one small caveat. All exchanges were admitted to BCH 1:1 ratio to the balance of the user in BTC, and only Bitfinex, the largest on the market exchange of bitcoin, used the coefficient of 0.8539. That is, for every 1 BTC on the balance sheet that the user receives only the BCH 0.8539.
How the stock exchange explained this arbitrary «cut» earned tokens? These explanations are, frankly, ridiculous. In a statement about the distribution of tokens BCH dated August 2, 2017, the exchange clarifies the following:
After the fork, the exchange has for the distribution of 101 798.8855 BCH, based on available balances 131 237.8562 BTC and BTC -29 438.9707 in open margin positions, which is the distribution coefficient 0.7757. However, after «some calculations» (obviously, to the smaller users were outraged), the coefficient was increased to the above 0.8539. In addition, the exchange accuses some users of fraudulent leveraged positions with the aim to get more BCH.
For anyone who understands how the market, these explanations are laughable, and for any truly regulated site would be deemed illegal. The entire balance of the user in BTC belongs to him, no matter what positions he used. Coins user is always stored on the purse exchange, and all exchange operations are performed with virtual balances, otherwise they would occupy considerably more time. The exchange received BCH on their wallets full of bitcoins stored on it, therefore, the deduction can be justified only by technical imperfection of the exchange platform, Bitfinex or… the financial immorality of the leadership of the exchange.
In the end, even taking into account the disadvantages of the software platform in loans BCH stock exchange was obliged to donachislili as of the closing margin positions in a manual mode, but this has not been done. Therefore, the exchange simply appropriated 15% of BCH owned by the users. Or stole them, if you think the word is more accurate. After all, margin trading and P2P-loans relies not only on Bitfinex, but no other stock exchange has not produced such a «cutting» in the calculation of the BCH and the coins of other forks.
However, customers Bitfinex were forced to «eat» explanations, and not to ask for a Supplement. This happened for several reasons:
Future for BCH for the first time after hard forks was uncertain, and many did not take the cryptocurrency seriously.
BCH was obtained «as a gift», so their value was felt to be psychologically lower than the «real» cryptocurrency, for which earnings had to exert more effort.
The bitcoin exchange rate on August 1 were «pathetic» is now $2700, and BCH in the early days of trade fell below $500, making the losses from missing 15% less significant.
The position of many exchanges at the moment still undecided, and the quick transfer, even with a significant deduction, is seen by many as a concession on the part of the exchange.
Personal damages each individual user was relatively small — at least, not so large as to sue an offshore exchange, including all court costs. Yes, and to prove in court which has no regulations for cryptocurrencies, which exchange was required to accrue for some tokens, it seems almost impossible.
Due to these reasons, the actual assignment Bitfinex 15% BCH passed without unrest in the community. But if you count the loss its users today, numbers no longer look ridiculous. Calculate from the above numbers. The exact percentage of the deduction amounted to 0.1461. Now, multiply it by 131 237.8562 BTC and get the BTC 173.851 19, which was not assessed BCH. So, after a hard forks Bitfinex assigned user owned 19 173.851 BCH, which at the current exchange rate on Bitfinex itself, $1583.2, is $30 356 040. And the peak values of the rate BCH reached values almost twice as high today.
If all of the above calculations are correct, Bitfinex assigned user owned $ 30 million (or over $50 million, the higher rate)!! A good «earner» for a few hours of work of programmers and technical support, isn’t it? If it can be called earnings.
How to steal BTG: Bitfinex being ripped off users ‘ money
And finally, I will mention one episode from activities Bitfinex. Its essence is contained in the header. Yes, that’s right — not steals, and steals things. Because the assignment by the stock exchange with billions in turnover of some hundreds, or even tens of thousands of dollars is ridiculous, isn’t it? Maybe. As in the case of BCH, the facts lie on the surface, but in this situation, to obtain accurate figures are not possible, as the exchange did not publish them.
Hardwork with the creation of Bitcoin Cash was the first in a series of similar events. The following notable hardwork occurred on 24 October, when the cryptocurrency Bitcoin Gold.
Despite the fact that technically, this hardwork almost no different from what happened on 1 August, this time Bitfinex has made enrollment in full, i.e. with a ratio of 1:1. This is clear proof that the reasons for the deduction of 15% BCH was «sucked from the finger», and no actual prerequisites for reduce charges, BCH was not.
If hard forks of Bitcoin Gold exchange did not dare to bite anything from pulpwood users, however, some of them still fell under obtaining money. It happened with those who had the misfortune to keep a short margin position at the hard forks.
I must say that the market is almost warns that users who took the BTC hard forks when you get a negative balance in BTG. However, some of them probably did not read the message, and others, understand the principles of stock trading, aware of the untenability of such action and hoping for the right balance of information in the future.
One way or another, but some of the traders on Bitfinex have left open a short position in BTC at the time hard forks, and accordingly received negative balances in the BTG wallet at the margin of the exchange. But the most interesting began later. Working within the regulatory requirements of the stock exchange, of course, would have to spend clearing after closing margin positions, and after that negative balances would be eliminated (maybe with a small deduction for the use of borrowed funds). However, Bitfinex didn’t even think to do it, and offered to borrowers BTC to buy with real dollars, those tokens BTG, which was obliged to charge the owners of the original balance without any extra maneuvers.
Explain how it happened. The exchange at the time hard forks accrued on the balance sheets of BTC stored on its purses similar to the number of BTG. Recall that this calculation was completely virtual blockchain BTG was launched two weeks later.
Let’s say a trader at the time hard forks of Bitcoin Gold had an open short position in the amount of 1 BTC. According to the logic of exchange, since the calculation was made for the borrowed funds is likewise located on the free balance, the lender (owner occupied BTC) a positive balance in the amount of 1 BTG, and the debtor (trader, won the 1 BTC for opening position), respectively, the negative balance of -1 BTG. With the right trading platform, at the closing of this transaction margin or the end of the loan period, the exchange had to spend (automatically or manually) clearing and conversion of balances in which the lender gets back his 1 BTC (BTG he’s already accrued), plus the rental fee for the funds used by the debtor in the transaction. However, the calculation took place only by the BTC and the balance in BTG left in its original form — the lender has received your legitimate 1 BTG and the customer left… from nowhere from nowhere debt 1 BTG.
The beauty of this fraudulent scheme is that the exchange ordered the debtors to redeem their own money BTG received her from the air and has already been transferred to the rightful owner. Hard forks when the number of BTC and BTG were equal, but the market here was the proverbial «man in the middle»: in fact, the debtor purchased the creditor 1 BTG received by the exchange at a fork, and the coin BTG (or its equivalent in dollars or bitcoins) left in the mediator, that is, the exchange. At the same time, support the exchange on the questions of the customers forced to buy their counterparties BTG gratis, posted false explanations: that they are taking BTC, at the same time and took BTG, which should return when you close margin positions. The following is a response from the tech support Bitfinex, striking in its cynicism:
In fact, it openly says: since our platform can’t correctly count your money, we’ll just take them myself. Obviously, many succumbed to this trick and did not demand the return of their money. Thus Bitfinex became the owner of the dollar equivalent of several hundred (and possibly thousands) of BTG, literally taken out of the pocket of their clients. For exchange with a turnover of Bitfinex, this amount barely exceeds the income of several days work.
In contrast to the «neonaticide» BCH, this situation is clearly criminal in nature: if in the first case the exchange is, in fact, was not required to accrue any tokens at all, the second she forced the hapless customers to buy BTG has her other clients have for real dollars or bitcoins. And no «warning» from the stock exchange do not condone such fraud. However, as already written above, who is going to sue an offshore company because of the several hundreds, maximum thousands, of dollars?
You can judge on the legality of actions Bitfinex in these two situations on the basis of the above facts, however, regardless of the legal aspect, both of them perfectly shows the relationship of the exchange to its customers.
Where will it all end ?
Based on the foregoing, it is safe to say that the people behind Bitfinex and Tether — shadow shark cryptobytes who do not shun any means of making money. Their activities are covered rather poorly, but they play a very significant role in the cryptocurrency market. Their qualifications are for making money «sravnitelno honest» ways on the verge of legality is not in doubt.
There are good reasons to assume that Bitfinex will soon become insolvent, as evidenced by numerous user complaints about delays in payments or failing to withdraw their money. As is known, the smoke without fire does not happen. In addition, the Tether continues to generate hundreds of millions USDT, although they have released a huge amount. This indicates difficult financial situation of the exchange transactions with dollars.
Since Bitfinex is located in «tax havens», in the case of insolvency of the exchange users will be left with nothing, similar to the pyramid Bitconnect, which closed with debts in the millions of dollars received for nothing now standing tokens.
If you are wondering, where is located the virgin Islands is in the Caribbean sea, near the Islands of Haiti, Puerto Rico, Antigua and Barbuda. It is a beautiful tropical location allows the owners to enjoy the warm weather, cool drinks and gorgeous women, but this is probably not the only reason why the company was in such an exotic place? Oh, we forgot: offices Bitfinex and Tether are not there, and in Hong Kong and the United States. Maybe can find. But no one knows their exact address.
According to statistics, up to 45% offshore companies registered in the virgin Islands that allows them to avoid financial laws of the United States, China or the European Union and not to be subjected to excessive police attention and regulators. Do not think that in this case US law enforcement agencies, EU or other countries will be able to come to the rescue when your money magically disappear. But if you still want to sue the company, you will have to go and sue in a local court.If there is, someone to sue.
Therefore, we recommend that when working with Bitfinex and other exchanges, leading a large trade in USDT, proceed with extreme caution and not to store them on for you large amounts of money even if trading conditions seem to be very attractive, and impeccable reputation.