Cryptocurrency! It would appear that TETHER is now being looted to prop up BITFINEX, which has been defrauded, as routinely happens in this space. Anybody seen the principals of Quadriga SX recently?:
Izabella Kaminska: We All Become Mf Global Eventually, Tether Edition: "The New York attorney-general's office... obtained a court order directing Bitfinex's parent company to suspend making transactions from Tether accounts into Bitfinex accounts for the purpose of masking a loss somewhere in the order of a 850m due to a suspected fraud by a partner processor. The documentation... contains... stuff... from a Bitfinex employee—codename Merlin—on August 15th last year, to... a Panama-based entity called Crypto Capital... which also... just happened to provide payment processing for Quadriga XS, the Canadian exchange whose founder 'died' with the keys to about 140m of customer money): 'Please understand this could be extremely dangerous for everybody, the entire crypto community. BTC could tank to below $1k if we don't act quickly.'... Opacity offers huge temptation with respect to wrongly taking advantage of customer flow information for prop trading purposes or for dipping into customer deposits for proprietary purposes without customer approval. Or just losing funds in other careless ways.... The key points are as follows...
...Number one... Bitfinex, iFinex, BFXNA, BFXWW are operated by the same small group... registered in the... British Virgin Islands... do not have a... license to engage in virtual currency business in New York.... Number two... both Bitfinex and Tether held accounts at two New York-based banks.... Number three... Bitfinex... relies on having sufficient US dollar deposits on hand to fill withdrawal orders.... Number four... the OAG suspects that the Bitfinex groups still allowed US and New-York-based ECPs to transact on the platform, as well as New-York based individuals.
Moving on to Tether... Tether has long maintained that every dollar's worth of Tether in circulation is matched by a dollar they hold securely in a reserve somewhere in the world. And yet, much of the crypto world has long speculated that there is not sufficient proof that this is really the case.... Our blogging friend Bitfinexed noticed that the description of how Tether manages its reserves had changed on their website... all but admitted that its Tether reserves were potentially being used as a slush fun... de facto admitted that it was operating as an unlicensed bank, since the only entities usually allowed to lend out depositor funds to third parties without depositors knowing the full details of where the funds are going—while maintaining the promise of par value redemption to depositors—are licensed banking institutions....
By mid-2018 Bitfinex was having real trouble honouring withdrawal requests because Crypto Capital had failed to honour its agreements with Bitfinex/Tether.... Rumours started to circulate that Bitfinex/Tether were insolvent.... Bitfinex employees had been writing distressed messages to Crypto Capital, in a bid to get the money out and processed, such as the quote at the top... as well as: "Is there any way we can get money from you? Tether or any other form? Apart with Crypto Capital we are running low on cash reserves." And then: "Please help." Eventually, Crypto Capital claimed they couldn't send the money because 851m of it had been seized by government authorities in Portugal, Poland and the United States. This, however, was also not true....
By February 2019 Bitfinex decided it would have to structure itself a loan from the Tether reserves.... But... it emerged Bitfinex had already drawn on Tether's reserves to the tune of 625m in November 2018.... By late December 2018... Bitfinex... had become concerned that the Crypto Capital sums had actually been lost to a fraud, rather than seized by authorities. It was at this point that the executives decided to engineer a secured revolving line of credit of up to 900m on commercially reasonable terms from Tether to Bitfinex.... On March 27, executives initiated a transaction debiting 625m from Tether's Crypto Capital account and crediting the equivalent Bitfinex account.... Engaging in such transactions without a banking license is pushing the boundaries of legal financial activity. Doing so and not disclosing what you're doing to customers is positively not in the realms of compliant activity...
#noted
