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Bitfinex and Tether respond to accusations of mismanagement

Bitfinex and Tether respond to accusations of mismanagement

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Bitfinex and Tether have broken the months of silence and finally responded to accusations of mismanagement.

In brief:
Bitfinex and Tether have broken the months of silence and finally responded to accusations of mismanagement.

The world's largest cryptocurrency exchange, Bitfinex and the issuer of a dollar-pegged cryptocurrency, Tether have broken months of silence, and have finally responded to accusations of mismanagement.

On Thursday, Ronn Torossian, a newly hired outside spokesman for both companies, in a statement via email, blamed "questionable actors" for raising doubts about them. He wrote, “Bitfinex is committed to becoming the most transparent crypto exchange in the industry."

While pointing particularly the pseudonymous blogger who has thrown shade on the exchange in a series of lengthy Medium posts and YouTube videos, Torossian said, "Who is Bitfinex's biggest critic? An anonymous online Twitter user who throws allegations around without even revealing his or her own identity."

Adding on, he says, "[W]henever someone lobs accusations and attacks behind the veil of anonymity, one has to question their motives."

Torossian in an email said that the company is managed by CEO Jan Ludovicus van der Velde, Chief Strategy Officer Phil Potter and Chief Financial Officer Giancarlo Devasini. He wrote, "[f]ar from hiding in anonymity, Bitfinex is led by a strong management team." Though his statement did not identify any of the professionals, and as of Thursday night they were still not listed on Bitfinex's site.

Recently, in an article, The New York Times has cited the document about the controversies surrounding Bitfinex. The statement is also remarkable in the sense that it confirms Tether being connected to Bitfinex. The documents contained in recently leaked Paradise Papers have cleared all doubts of the link between the two organizations and has confirmed that Potter was a director and Devanisi a shareholder of Tether. However, Tether's website has not yet identified any of its leaders as of Thursday night.

Moreover, regarding the concerns raised by many of the companies' critics about Tether's reserves, Torossian said, a full audit "will be released as soon as possible," noting that an interim report found the company had $442.9 million of cash as of Sept. 15 to "fully back" the tether tokens.

However, there is a warning in the report from auditor Friedman LLP of East Hanover, N.J. According to it, the account where the cash is held is in the name of a trustee, and the report said it could not assure that Tether had any enforceable agreement with the trustee.

ikewise, in the interim report, Friedman said that it did not assess the terms of the bank account and Tether's ability to withdraw funds or whether the money had been pledged for anything other than redeeming tokens could not be confirmed.

Torossian further wrote in the statement that Tether is "working closely with law enforcement" to investigate the breach it reported this month, in which $30 million worth of tether tokens were allegedly taken.

He confirmed that, like many cryptocurrency exchanges, Bitfinex has lost "a number of U.S.-based banking relationships. But the exchange was able to maintain and add to its roster of banking partners around the world."

Adding on, he said, "providing the vast majority of its customers with a diversified and resilient banking network to provide consistent liquidity." Though, he did not name any of those banks.

He wrote, "Bitfinex abides by all existing laws and reporting requirements such as KYC/AML. The exchange works closely with financial regulators, law enforcement, compliance personnel, and financial institutions to provide the highest possible level of protection and service for its customers."

Torossian didn't directly clear the speculation that the exchange has been printing tether tokens to manipulate the price of bitcoin. He apologized for the exchange's long silence and asserted that the main culprit was company's rising exchange volume.


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