Tether Under Threat? Bloomberg Posts Old News and Crypto Market Takes a Dive
Bloomberg's rehashed story on U.S. CFTC sending subpoenas to Bitfinex and Tether caused the crypto market to lose $27 billion in an hour.
Just an hour ago Bloomberg published a story saying U.S. regulators subpoena crypto exchange Bitfinex, Tether and alarm bells rang all over, with the total cryptocurrency market cap dropping from over $529 billion to $502 within an hour.
While the publication did not mention a source, it said that the U.S. Commodity Futures Trading Commission had sent subpoenas to the companies, which responded, calling it routine activity.
“We routinely receive legal process from law enforcement agents and regulators conducting investigations. It is our policy not to comment on any such requests,” Bitfinex and Tether responded, according to Bloomberg.
Following the story, Bitcoin dropped under $10,000 once again (on some price indexes) and Tether also went down to $0.975. However, the story was updated an hour later, adding that the subpoenas were sent last month, on December 6, 2017.
Tether is not a traditional cryptocurrency, since its issuing company claims it is pegged to real U.S dollars, which means it does not fluctuate much in price and is used as a hedge against the volatility exhibited by other cryptocurrencies.
However, recently there has been a lot of doubt around Tether’s claims, particularly due to lack of transparency and a curious pattern of more Tethers being quietly minted every time Bitcoin took a dive.
There are people in the crypto community which believe Tether is a house of cards, waiting to fall, especially since the company fails to entertain numerous audit requests, further fueling skepticism in regards to its actual US dollar holdings backing up Tethers.
The CFTC has also been actively pursuing any implications of securities fraud under the guise of cryptocurrencies and ICOs, and recently took action against My Big Coin, filing fraud and misappropriation charges.
It remains to be seen how the story develops, but given how an early December story can cause a major sell-off goes to show the highly sensitive nature of the cryptocurrency market.