Rumor Says Bitfinex Preparing for Tether (USDT) Exchange Offering
Social media rumors are suggesting that Bitfinex may attempt to raise funds in USDT.
Bitfinex, the exchange that recently revealed that up to $850 million of its funds are locked away due to investigations, may be planning an escape route through an Initial Exchange Offering (IEO). Without an official announcement, the speculations are related to social media accounts.
The chief source on the matter claims he is aware of large-scale investors preparing to participate in an IEO:
The attempt to sell Tether (USDT) directly from the exchange to large-scale “whales”, may be an attempt to supply Bitfinex with new funds and liquidity. Bitfinex claims the funds locked due to the activity of its payment processor, Crypto Capital, are not lost, but the exchange may be seeking new funding.
Bitfinex is seen as key to the stability of the digital asset market. In the past, activity on the exchange has been related to Bitcoin (BTC) price booms. Now, USDT coins are essentially supplying the majority of liquidity for both BTC and leading altcoins. As of Tuesday, more than 80% of BTC volumes were against USDT. Bitfinex held a 14.7% share of all trades for BTC.
In the past, Bitfinex has issued a token to compensate for the theft of more than 744,000 BTC back in 2016. Now, the potential liquidity problems and the backing of USDT by fiat may be a cause to seek new financing.
Recently, a document surfaced showing that Bitfinex directly sought $900 million in financing from Tether. While the financing may be considered a technicality, in effect Bitfinex is making the entire cryptocurrency ecosystem of exchanges and investors to absorb their losses and delayed payments.
Currently, Bitfinex holds only 12 million USDT, down from 22 million a few days ago, as some of the funds were sent back to the Treasury wallet. Huobi is expanding its holdings, up from around 300 million a day ago to as much as 412 million coins. Binance has also shuffled around its USDT, moving it from its cold wallet to a series of hot wallets.
While BTC stays above $5,200, there are worries that the Tether and Bitfinex conflicts may lead to severe crashes, if it turns out USDT is compromised and not backed by real assets.