Last week, Bitcoin experienced the highest high — $17,154 — then swung low by more than $3,000 to $13,964. Its future isn’t the only cryptocurrency mystery; so, too, is Tether.
Bloomberg reports on Tether, the $814 million behind it and its relationship with Bitfinex, “the world’s biggest Bitcoin exchange.”
Considered the more stable alternative to the unpredictable Bitcoin, each Tether is backed by one U.S. dollar held in reserve. Though, points out Bloomberg, its terms of service state there is no guarantee that Tethers can be redeemed or exchanged for money and that no legal claim can be made.
If each Tether is backed 1-to-1, then, says Bloomberg, there should $814 million “parked in bank accounts somewhere”; but not everyone believes that. A Tether user named Oguz Serdar attempted to cash out $1 million in the cryptocurrency this past November and was turned down by the company. Eventually, Serdar traded his sum for Bitcoin. Bloomberg quotes Serdar:
“I don’t think they have even $100 million or $200 million in a legitimate country. It’s the elephant in the room, but a lot of people don’t want to talk about it because they’re invested in it.”
After Wells Fargo & Co. withdrew this year from being the correspondent bank for customers to send money to Bitfinex and Tether’s banks in Taiwan, the two companies sued, though later dropped the lawsuit. Bitfinex announced this month it would no longer serve the U.S. market because of the business expense. It’s now directing prospective customers to a bank in Poland.
Of note, per Bloomberg, is that neither Tether nor Bitfinex reveals their locations or executives on their websites. Internet results ranging from a LinkedIn page to the now-infamous Paradise Papers reveal some of Tether and Bitfinex’s leadership and that the latter’s origins are in Hong Kong.
To combat what it calls “false claims and related activity,” Bitfinex has hired the law firm of Steptoe & Johnson LLP.