There is plenty of head scratching decisions coming out of the unraveling Bitfinex story, with it’s shady relationship with stablecoin Tether under the spotlight. New information is coming out every day, and one source that is helping make sense of it all is YouTube channel Chico Crypto.
Hosted by Tyler Swope, the “Sherlock Holmes” of cryptocurrency has been looking hard at the evidence coming out of the Bitfinex story since May 1. He recently looked into the history of iFinex, the parent company of both Bitfinex and Tether, and drilled all the way down to what’s happening right now. In that video, titled “Tether-Bitfinex Investigation The Entire Truth Exposed! You Won’t Believe Who’s Involved!!”, he gets into the deceptive history of the company.
As he relates from his research, in 2012, iFinex was founded in Hong Kong. Then in 2013, Bitfinex was incorporated, also in Hong Kong. By September of 2014, Bitfinex operators set up Tether Ltd in the British Virgin Island, but told the public that it was separate from Bitfinex. That was revealed to be untrue by the Paradise Papers leaks.
Bitfinex then went through a series of hacks, causing them to first lose 1500 BTC in May 2015, and then another $75 million worth in August 2016. As a result, they turned to Noble, a bank run by Brock Pierce.
When the market went to new highs in December 2017, Tether had to be printed at crazy new amounts to match demand. When the market then crashed and most people withdrew, Noble struggled to meet demands. That’s when Bitfinex got involved with Crypto Capital, the same shady payment processor that was involved with QuadrigaCX, and is currently under investigation.
Crypto Capital seems to be closely linked to Coinapult with exclusive business deals. That company is invested in by Roger Ver.
How does Roger Ver feel about the stability of Tether? In a Q&A session, he said Tether would hold its value in a new market crash. He’s visibly anxious as he says this, and Swope comments, “We can’t trust Ver one bit, since like, when he said he saw Mt. Gox’s bank statements, and they were fully solvent.”
Then looking at recent activity, Swope notes that while BitFinex has admitted to losing $850 million because of Crypto Capital, and at the same time, iFinex has borrowed $900 million from Tether. That money is now flooding into the market. “What do you think they are doing?” he asks, “Buying BTC, pushing the price up, selling the Bitcoin for USD, so they can pay back the missing $850m.”
He ends that video noting that now, with the New York Attorney General investigating, several crypto whales are in trouble. The executives of Bitfinex could go to jail. Roger Ver, for his involvement, is also in big trouble. As investors in Tether, Binance CEO Changpeng Zhao has a lot to lose as well.
Despite all of these issues though, the price of Bitcoin Core (BTC) is rising. Crypto Chico had several theories why this is happening, and all of them involve this cabal of crypto whales.
In his May 4 update, titled “Bitcoin Manipulation Scandal You Won’t Believe!! Who Is Doing It & Why?”, he speculates that one of two things could be happening here. The first is that everyone who stands to lose from a sudden crash of Tether is pumping the price of BTC now, and they will dump it right before they think the jig is up. He references a secret recording of shareholders of Bitfinex, where Phil Potter, chief strategic officer of the exchange, emphasizes the group needs to pump the price of BTC by any means possible.
Further adding to his evidence of how much Bitfinex is in trouble and scared of what will come next, Swope notes that BTC is trading at a high premium on the exchange right now. The same scenario existed at Mt. Gox before their financial troubles fully came to light.
His last major theory is that the price of BTC is currently jumping because of a totally different plot by Binance. They recently moved their Tether holdings, the biggest in the world, from one cold storage wallet to another. However instead of doing this in one transaction as they promised, it appears they used a mixer to do it in hundreds of thousands of transactions and avoid traceability. As a result, the price of BTC went up.
The ultimate plan, he believes, is for Binance to introduce their own stablecoin. He points to a tweet by Binance’s CEO that hinted at their plan to do this.
If they go through with the idea, Swope is worried they will become “a Tether printer, but on steroids. There is no way you can trust what their blockchain says, because they can edit it as they please. The exchange who should not be named [his nickname for Binance] is currently trying to take over the market, and Chico Crypto isn’t going to let it happen.”
As he noted in his earlier video, ongoing investigations will reveal more of exactly what went down with Bitfinex and Tether, and those who have swindled the market will pay their price. However, he’s right that the major players, like Binance, still need to be watched, because this story’s ending still hasn’t been written.
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