CryptoCompare market view: The alleged $850m ‘cover-up’
The Crypto world was rocked last week by the announcement from New York Attorney General Letitia James of a court order against the operators of the Bitfinex exchange and Tether – issuers of the stablecoin of the same name.
The Attorney General alleges that the operators of Bitfinex and Tether engaged in fraud to hide the loss of $850m from the exchange to Crypto Capital Corp, a third-party payments processor used by Bitfinex. The court order alleges that Tether transferred funds and extended credit to cover losses. Crucially this meant, according to the allegations, that since November 2018 the Tether stablecoin ceased to be fully backed by USD.
Bitfinex was quick to respond, claiming that allegations were “riddled with false assertions”, and explaining that the $850m have in fact been “seized and safeguarded”, and is actively working to recover the funds from Crypto Capital Corp.
Crypto markets initially reacted quite strongly to the news with the Bitcoin (BTC) price dropping more than five per cent in under an hour. Losses extended to most leading altcoins, including Ethereum, Ripple and Litecoin.
The Bitcoin price has recovered substantially since the dramatic news, and at the time of writing is trading at $5,220, meaning that Bitcoin and the other top Cryptoassets have stayed relatively stable over the past week.
In less dramatic news, cryptocurrency hardware wallet company Ledger confirmed a EUR 2.6m investment from South Korean tech giant Samsung, a move that values the Paris-based company at EUR 260m.
Separately, a survey released this week revealed that 63 er cent of Europeans believe that cryptocurrencies will still be around in a decade’s time. The survey, conducted by Japanese exchange operator Bitflyer, quizzed 10,000 citizens across Europe, and showed that while most respondents think Cryptoassets will exist in 10 years’ time, only seven per cent think bitcoin will be a good investment in the “long-term”.