Bitfinex’ed said all he thinks about Tether
Toughest critic Tether and Bitfinex — anonymous under the name Betfinex’ed — gave a detailed interview to the Modern Consensus, which explained why bitcoin is moving toward $15. He (or she) was told, when I first began to investigate the activities of Tether and Betfinex and what it led to.
The main points Betfinex’ed are as follows:
hacking Bitfinex in 2016 was carried out by insiders;
billions of tokens Tether unsecured and most likely their last report was a fake.
the critic predicts a bleak future for bitcoin and the blockchain;
justifies why the price of bitcoin falls to $10 — $15.
The cost of currently in circulation stablon is estimated at $2 billion, but it has a negative impact on the stock market. According CryptoCompare, half of all bitcoins traded on cryptomeria paired with a Tether. For comparison of the transaction against the dollar amount to only 18.7% of trading volume.
It is assumed that the Tether is secured by deposits in US dollars one to one. But there are these deposits really? This question is repeatedly asked one of the fiercest critics Tether its subsidiaries Betfinex — anonymous blogger with the nickname Betfinex’ed. He or she, or they sale, has for years criticized the activities of these two companies. At first, few listened, but the last time cryptologist beginning to take seriously these charges.
Bitfinex’ed agreed to an online interview with one condition: he will not ask questions, the answers to which would reveal any personal information. We had no way of knowing whether he has a vested interest in bad news about the Tether or Bitfinex, so readers should themselves give their assessment of the information contained in this interview.
The market has repeatedly expressed doubts about the reliability of the Tether. Doubts intensified after the publication on Consensus Modern history that is based in Puerto Rico Noble Bank where the Tether was holding your Deposit is in a difficult financial position. Although the Tether and argued that we are cooperating with the Bank Deltec Bank in the Bahamas, according to CoinMarketCap now it is trading at 98 cents on the Kraken — 95 cents, and the offer was reduced from 2.6 billion tokens up to 2.2 billion over the last two days.
In this interview Bitfinex’ed questioned Tether and Betfinex — one of the world’s largest currency exchanges.
We asked Wachsman, which is engaged in public relations Tether and Bitfinex, with a request to comment on some of the 27 charges Bitfinex’ed put forward in this interview. Hope to get a response from them.
In recent days, the price fell Tether. (according to CoinMarketCap)
It seems to Bitfinex’ed come interesting times. How does it feel to watch how it all unfolds?
I’m very excited. Among my friends there are a lot of very smart people who agree with what I say.
Who is on the list of “very smart”?
John Griffin, Amin Shams, Nicholas weaver, Stephen Palli, Preston Byrne, but it is only those whose names immediately come to mind. Actually there are dozens.
So, let’s start from the beginning. What made you decide to start an investigation of Bitfinex?
I have long believed in bitcoin, but would never trade, because I think trading is absurd. I was watching the auction on the second monitor, trying to understand what is happening. In early 2017, right after the SEC refused to register the ETF, I decided to conduct a more in-depth study of the situation. My position on bitcoin was “impossible to afford to lose so much money”. Taking into account the concerns of the SEC are possible manipulations and following the logic of “I can always buy back if you feel that the SEC is wrong”, I am fully immersed in the case and started to dig deeper.
Was there anything special in the SEC statement that attracted your attention?
Actually no. It was more intuition.
How do you bitcoins?
This is not the case.
But it was enough, even at the beginning of 2017 to get you to start an investigation?
Yeah, I just wanted to be bought back. I understand the benefits, but before you return, decided to exercise caution. Before you invest in something, it is necessary to study the issue.
What attracted you to bitcoin?
I studied libertarian, free market. In addition, I was attracted by a software aspect of Bitcoin.
What did you notice on the monitors, and then decided to investigate the market of bitcoin?
How the price changes, always seemed suspicious to me. I saw how prices have changed enough to eliminate a lot of traders, and then they return to where they were before the strong changes. The market doesn’t feel organic, especially when there was no news. On BitcoinMarkets was a joke: “Bitcoin always moves so as to cause maximum pain.” It seemed that he was always moving in the wrong direction, which were betting most of the margin traders. It didn’t look organic.
It was characteristic of Bitfinex, or have you noticed this in other places?
This was mainly on Bitfinex. It was the main exchange, which I watched.
It occurred before or after the break?
Such manipulation was happening when I watched them before and after break-in 2016. I always saw the same pattern in a situation with bitcoin. The first really worrying sign I noticed at the end of March 2017, when suddenly bitcoin started to lose in price, which was very unusual.
Why he “began to lose value”?
I didn’t understand why, especially given the lack of red candles for a long period of time. Seemed unusual.
The price just started falling upwards for no reason?
The study showed nothing. BitcoinMarkets was silent. Whalepool not said a word about it. He fell and all was silent. I listened to an interview with Phil Potter (head of strategic Department Bitfinex) of 4 August 2017, in which he stated that payment will be made for all tokens and in that moment I thought Bitfinex insiders knew about this “good news” and began to stock up on bitcoins. However, a day later, on April 5, I discovered that Bitfinex has filed a lawsuit against Wells Fargo.
Let’s go back, as this is a key point. Talk about Bitfinex and “hacking”.
In Bitfinex announced the loss of 120 000 bitcoins, promised to conduct a security audit of and report what happened. Audit and report they have not provided. I say “hacking”, because with high probability it was fabricated by “hacking”. Based on what I know about the exchange and about the people behind it, I think “hacking” was done to cover the insolvency. How they reduced the amount of debt for all and all cryptocurrencies (except Coinbase), looked very suspicious. Then they tried to force everyone to buy assets Bitfinex and even tried to release the so-called “tokens of restoration of rights”, which will be needed if they somehow manage to return the stolen bitcoins.
What do you mean “except the Coinbase”?
At Coinbase seems to have been an account on Bitfinex. To account Coinbase did not apply the amendment to the amount of the debt, and this means that others lost more. People about this, of course, did not.
Coinbase did not say? Or Bitfinex? And how do you know about this?
Nobody admitted. But a New York Times reporter Nathaniel Popper talked about this. This statement in August 2016 would have caused a giant scandal. Some traders were very large short position on bitcoin, but bitcoin was not the most. It is also used reduce the amount of debt, despite the fact that they didn’t have bitcoins on Bitfinex. It’s just theft.
So they sold the tokens “right of return”?
Yes, tokens RRT (recovery right token) is used to force people owning BFX tokens, convert them into action. Was said to the Finance Director Giancarlo Bitfinex Devasena: “the fastest way to get your money back is to move their tokens in stock, and then sell them to another shareholder.” This is also called a Ponzi scheme.
What was their plan?
In fact, Bitfinex no one is paid. They were hoping for new shareholders and buy back shares from victims of hacking. Bitfinex lost INCOME that could earn in ten years.
You claim that bitcoins have been stolen in order to hide the financial problems of the exchange. As this is supposed to work?
If, at the time of the hacking you have on Bitfinex was $ 1 million and 0 bitcoins, when they lost bitcoins, they took your 360 thousand dollars, despite the fact that the dollars were not stolen as bitcoin. But this is applicable to each currency traded on Bitfinex. Not only to bitcoin and the U.S. dollar.
In other words, they distributed the loss at all.
The distribution of losses should only apply to bitcoin. That is, they lose 36% of all bitcoin traders and for all reduce the amount of debt of 36%. If you want to hand out all tokens with a promise to recover the lost bitcoins. But if they did, it would not solve insolvency in U.S. dollars. If the exchange is short on cash, taking away 36% of the $ all will help to solve this problem, but it needs justification. Consequently, the break-in. Or should I say “hacking”. In fact, this exchange was supposed to go bankrupt in August 2016, and Mt.Gox. The losses were too great, and the only way to convert them into a Ponzi scheme, just as did Mt.Gox.
They cut only a dollar position or a position in other currencies?
Cut all except the Coinbase. To all on Bitfinex was applied to reduce the amounts outstanding. So 36% for USD, bitcoin, ether, anything, although the exchange lost bitcoins only. What they did with kripalani who withdrew from customers remains to be seen. I suspect that they have used these tools for trading and market manipulation.
And there was no way to track where your 36%?
No, they promised the community to conduct a full audit. As a security audit and a financial audit. They never did, and it was supposed to be in 2016.
They escaped bankruptcy in 2016. What happened then?
No wonder that with an Arsenal of bitcoin began its rally that lasted into December and the new year price. Then there was a hype around ETFs.
SEC choked it out. And then what?
In response, the price of bitcoin fell. Interestingly, after a few days the price recovered, though the news was very bearish. It is unclear why. There was another sharp drop, and then the price gradually came down — and also without any apparent reason.
That’s when you heard an interview with Phil Potter?
An interview in which they joyfully the message of redemption and how they “rhoxolani” (unGoxxed). The reality is that they artificially increased the rating of the company from 200 million to 250 million and sold 50 million shares of people with tokens BFX. The rest, apparently, was to be paid to the Tether, because the release of this cryptocurrency has increased. In this interview, did not mention any banking aspects. Nobody asked questions about it. However, some traders obviously knew the reasons for the loss. The next day there was a lawsuit against Wells Fargo. I got a copy, read it and immediately understood why the price is reduced. The news of compensation could not be bull.
Rated by venture capitalists.
No, the rating was a number that they just pridumali. And more importantly, the number that they came up with when I wanted to get the support of the Bank and tried to sue Wells Fargo. I very much doubt that they were telling potential buyers about their Bank issues or on a judicial process that was about to start.
Where they announced it?
It was in that interview, 4 April 2017. The lawsuit was filed 5 APR.
So who are they “compensated” with Tether?
Not everyone could be converted into shares (the Americans), so they filled up their accounts in Tether/USD on the exchange. However, no one could at that time bring the US dollar. The only way out… bitcoin. It is impossible to say whether there was even the money they were given because no one could bring them out. You can use them only in order to raise the price of bitcoin. So it’s possible that they never existed.
The fact that Bitfinex lost Wells Fargo, was caused by a release Tether, or something else?
Bitfinex does not meet the requirements of KYC/AML (“Know your customer / anti money laundering”), and this fact is the shareholders cited as a big plus. They do not want to comply with KYC/AML. They want only, I would say, created videmo KYC/AML.
What do you mean “create the appearance of KYC/AML”?
Saying “to create the appearance of KYC/AML”, I mean that on the exchange there are ways around KYC/AML. Take, for example, a drug dealer. He buys bitcoin for cash. Send bitcoins to Bitfinex. Sell for USD on Bitfinex. No KYC is not required. Need dollars? Buying bitcoin for USD on Bitfinex. Withdraws cash at an ATM. That is, has a Bank account in US dollars with no KYC/AML. It is illegal.
It was the first part of the interview. To be continued.