An Interview With the Psuedoanonymous User Calling out Bitfinex and Tether: Bitfinex’ed Explains it to a Layman
Full disclosure: I am an amateur cryptocurrency trader who joined the space in August of 2017. Before I entered the market I did months of research on blockchain tech and $BTC, etc. I am still in the market, at a minimum. I do not keep any currency on exchanges — besides $308 in Coinbase at the time of writing this. This is strictly to run my own personal experiment and I do not recommend anyone do the same. If you have cryptocurrency, please put it on a hardware wallet.
The following is an interview with the psuedoanonymous user Bitfinex’ed who has claimed Tether/Bitfinex is (most likely) operating under fraudulent circumstances. The interview was conducted via email, as Bitfinex’ed is concerned that if he reveals his identity he could be compromised (doxxing/swatting attacks by users and operators of both Tether and BFX).
I would like to thank Bitfinex’ed for taking the time to answer my questions and am open and willing to conduct an interview with anyone who whole-heartedly disagrees with him. I have not reached out to the owners of Bitfinex, but would be happy and willing to ask them questions that pertain to Tether and Bitfinex. If anyone would like to be interviewed in response to this article, please email me at caspiancey@gmail.com.
If you are unfamiliar with Tether, it is a cryptocurrency that is supposed to be a safe-haven during market corrections due to the fact that it’s (apparently) backed by $USD and $EUR (FIAT). On their website and within their whitepaper they state they have 100% backed reserves — meaning for every Tether (from hereon out, referenced as $USDT) there is supposed to be an equivalent amount of FIAT. They also state they are frequently audited and effectively transparent. In over a year, they have yet to provide a single audit.
Now, the interview:
- First of all, you’ve been calling Tether/Bitfinex out as fraud since April of 2017. What led you to this conclusion?
Their history with the ‘hack’ on Bitfinex, lack of transparency, and most importantly, lack of audits.
2. Have you ever been associated with or employed by iFinex — the entity that owns both Tether and Bitfinex?
No comment.
3. What is the significance of a currency that is pegged to the $USD and/or $EUR?
It can create what I consider, in Tethers case, fake liquidity. People sell for Tethers thinking they’re dollars, and this prevents selling for real dollars on exchanges with real liquidity. This causes prices to be highly inflated, in my opinion.
4. Tether is owned and operated by the same individuals who own the cryptocurrency exchange Bitfinex. Is this important? Why or why not?
It’s a conflict of interest of epic proportions to have an exchange create their own ‘money’ that can be exported to other exchanges.
5. Who are the owners and operators of iFinex?
Giancarlo Devasini and Phil Potter. The CEO is just a nominee CEO who helps with banking.
6. Do the owners and operators of iFinex have any previous history of misconduct? If so, why does it matter?
Giancarlo was caught selling counterfeit software in the 90’s, Phil Potter was fired from Morgan Stanley for bragging about how much money he made and shows very poor judgement. Giancarlo has admitted to thinking of committing fraud on Bitfinex (wash trading), but says he totally didn’t do it. Phil Potter has admitted to playing ‘cat and mouse games’ with banks, again, showing extremely poor judgement. Phil Potter also has admitted to trading on his own exchange when he has access to more information than other traders giving himself an unfair advantage. It’s quite possible he could be front running.
7. Many of your detractors make the claim that no other exchanges or cryptocurrencies have been audited. Why is it pivotal that Tether gets an audit, but no one is calling for an audit from, say, Ethereum or Coinbase?
They don’t issue their own ‘money’ that claims to be professionally audited. If Coinbase issued a USD Token that promised regular audits, and never provided one, I’d be attacking them too. Coinbase also has real banking in their own name, unlike Bitfinex which banks under shell accounts.
8. Another argument against your claims is that you sold out of the market when $BTC was worth between $1,000-$2,000. Do you regret selling your position? Do you hope to see $BTC go back to $1,000-$2,000 so you can buy back in?
The problem with this argument is I stated prices would skyrocket due to fraud, and I never bought back in, pretty confident it would skyrocket. I could have made way more money being quiet and just riding the wave. Crusades are hard and you don’t make much.
9. In August of 2016, Bitfinex was hacked and 120,000 Bitcoin were disappeared. Can you explain why you believe this was the foundation for a Ponzi Scheme/scam?
They lost over 10 years of revenue, the only way out in any reasonable time frame is to trigger a mania. What did they do with the funds they seized from customers? Because they seized 36% of all cryptos.
10. Despite your best efforts to prove that Bitfinex and Tether are fraudulent, there has been little to no market reaction. On a scale of 1–10, 1 being unsure, 10 being 100% positive, how certain are you that Bitfinex and Tether are actually committing fraud, and why?
There is no ‘market’, the price of Bitcoin is essentially controlled by a small cartel of big players, and it centers around Bitfinex. Ever wonder why with all of the bad press people kept throwing in hundreds of millions of dollars into Tether allegedly? Who would do that? Insiders and friends. Confidence factor is: 10, or 100% If they were legit, they’d have the audit out by now.
11. Tether has never been valued over $1.09 and never under $0.92. How has $USDT maintained a near 1–1 peg of the US Dollar for over a year?
Wash trading of the only USD/USDT pair on Kraken, which so far appears to be allowed by Kraken as they have been made aware of it. Proof:
https://www.youtube.com/watch?v=wz-ziPfP00M
12. iFinex was dropped by their banking institution, Wells Fargo last year. They went on to file suit against WF, but later dropped the suit. Can you explain why a bank would drop iFinex, and do any other crypto-related entities divulge their banking information? If so, which ones? If not, why is it important for iFinex to divulge this information?
Wells Fargo was not their bank. Their bank was banks in Taiwan, and Wells Fargo was the corespondant bank for their Taiwanese banks. Wells Fargo informed their Taiwan banks they will not handle transactions for Bitfinex/Tether anymore, then Bitfinex tried to sue Wells Fargo… they were not a customer of Wells Fargo. Their bank was.
Their bank dropped them because they misrepresented the nature of their business, at least one employee for one of their banks was fired for misrepresenting the accounts relationship.
13. Many crypto users state that while Tether may indeed be fraudulent, its small marketcap of just over $2 billion in a $500+ billion marketplace will have minimal effects overall. Can you explain why Tether could have much larger consequences if it’s proven to be fraudulent?
Market cap in crypto’s is a fallacy. Just because the ‘value’ of all coins is X, doesn’t mean everyone can get “X” out. Tether on the other hand, allegedly, is supposed to have all of the money. Typically with 10 million dollars of buy orders, possibly wash trades or tape painting you can inflate market caps of any coin to your hearts content.
14. Do you believe that any and all exchanges that utilize Tether as a means for moving out of $BTC and other altcoins could be dramatically effected by the collapse of Tether?
Tether exchanges are pretty screwed once Tether blows up.
15. If Tether does falter, do you believe the exchange Bitfinex could survive?
No
16. In mid-December, iFinex was subpoenaed by the CFTC. What is the significance of this, considering they were previously subpoenaed and fined ($75,000) by the same governmental organization?
Huge.
17. Despite said subpoena, Tether went on to print over $800 million worth of $USDT in the months of December 2017 and January 2018, preceding public awareness of the subpoena. Could this be because they are confident of their solvency and lack of fraudulent activity?
They’re bold and they think they can get away with it.
18. iFinex is based in the British Virgin Islands and maintains shell corporations and bank accounts internationally. How will US regulators be able to prosecute an international entity?
The same way they did it to BTC-E, Liberty Reserve, etc.
19. iFinex alleged they would file a lawsuit against you last year. After this you began to take donations to counter any suit brought against you. Since no lawsuit is pending, what will you do with funds donated to you?
They certainly still can, once it becomes obvious they won’t, the funds raised in December, around $15,000 will be donated to the Institute For Justice. IJ.ORG. All funds raised after December I am retaining to cover costs.
20. How will you be able to prove that you are donating your collected funds to charity if the lawsuit never materializes?
It likely will be handled by an attorney and we could make an announcement.