Business 25 June 2018

Erik Gibbs

Phil Potter bails on Bitfinex exchange

The chief strategy officer for Bitfinex, Phil Potter, has left the company. The news first surfaced via a report on Reuters, resulting in Potter stating that he decided to leave for personal reasons. Bitfinex said Potter will be replaced temporarily by Jan Ludovicus van der Velde, the exchange’s CEO.

Potter is also a director of the controversial “stablecoin,” Tether. In his statement, Potter said, “As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team. It’s been an incredible journey over these past four years, and while I wish my colleagues success and good fortune in their ongoing endeavors, I am also looking forward to new opportunities for myself in the days ahead.”

Bitfinex and Tether have been linked together, resulting in a fair amount of questions regarding the exchanges operations. Tether, which claims to have fiat U.S. dollar reserves equal to its issued USDT coins, has come under scrutiny in connection with those claims. Last week, a law firm representing Tether, Freeh Sporkin & Sullivan LLP, released a report confirming that the company does have the reserves, currently amounting to over $2 billion. However, many are not convinced, especially since Tether won’t release any internal documents.

As a result of the controversy, the U.S. Commodity Futures Trading Commission (CFTC) subpoenaed both Tether and Bitfinex last December. The CFTC has not yet released any findings following the subpoenas and some have resorted to legal channels to try and obtain information. A request for details sent to the CFTC through the Freedom of Information Act was denied, only further stimulating the controversy.

Bitfinex, which is incorporated in the British Virgin Islands, has dealt with a series of issues dating back to early last year. The exchange, the fourth largest in the world by trading volume, was hacked twice in 2017. Those hacks resulted in the loss of millions of dollars of clients’ funds. The exchange has also been fined by U.S. regulators, and has had its U.S. bank accounts closed.

Tether was also reportedly hacked last year. It alleged that, in November, hackers broke in and stole around $30 million worth of digital currency.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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