Bitfinex Hack Funds on the Move as Tether Controversy Continues

Bitfinex Hack Funds on the Move as Tether Controversy Continues

At around the same time asnews broke of the New York Attorney General’s court order against iFinex Inc – the operator of Bitfinex and the so-called stable coin Tether (USDT) – hundreds of BTC were moved from several wallets that had remained dormant since they were first identified as holding funds stolen from a hack of the Bitfinex exchange in 2016.

Around $1.5 million of BTC were moved from the wallets which is only a small fraction of the haul taken during 2016 hack. However, both Twitter and Reddit users were quick to highlight the transfers, note the timeline and possible correlation between the court order and the BTC transfers, serving to reignite old debates as to whether the 2016 event was an internal or external theft.

Co-mingling

The current court order, however is not directly related to the hack but to a more recent liquidity issue where New York Attorney General, Letitia James, asserts that “…the operators of Bitfinex trading platform, who also control the ‘tether virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds.”

Bitfinex have strenuously denied the allegation, going as far as to say the “…court filings were written in bad faith and riddled with false assertions…” and that “Both Bitfinex and Tether are financially strong – full stop.”

Whether financially strong or not, Tether has a history of polarising views within cryptocurrency circles and was recently delisted by Digifinex exchange over trust issues at around the same time it was included as an asset within the popular Exodus desktop wallet.

A number of commentators, such as University of Berkley’s Professor Barry Eichengreen, have previously questioned the viability of all stable-coins as they are pegged to fiat currency, raising not just trust issues for the users but also levels of governmental interest in a project.

One year ago, Bitcoin maximalist Tone Vays – who himself could be seen as a dividing force within the community – took this thesis a stage further when he hypothesised that “…Tether will blow-up, it’s inevitable, it will not succeed, it can’t. Just by it’s structure…it’s not decentralised, it’s centralised, and the day the U.S. Government wants to shut down Tether, they will.”