Bitfinex general counsel Stuart Hoegner has rejected the idea that only 74% of the tether stablecoin in circulation is fully supported. Hoegner emphasizes that the stablecoin is fully backed by assets that include cash, cash equivalents and bitcoin. However, both Hoegner and the company’s CTO, Paolo Ardoino, oppose the story that Bitfinex is plotting to pump the price of bitcoin.
The loan to Bitfinex
In a interview with Peter McCormack, Bitfinex’s general counsel asserts the misconception that USDT is not fully supported by an affidavit that he says was taken out of context. The contents of the affidavit, filed by Hoegner on April 30, 2020, as part of the “New York Attorney General lawsuit,” became public knowledge when the USDTThe market cap was only $ 2.1 billion.
According to that affidavit, about 74% of the tether support was in the form of “cash and cash equivalents on hand”. On the other hand, the remaining 26% was in the form of a $ 550 million loan to the company that “fully maintains” it. The general counsel explains that since the stablecoin’s total market capitalization has risen from $ 2.1 billion to its current $ 22 billion, the loan’s share of the USDT reserves have shrunk to 2.5%.
In the meantime, both Hoegner and Ardoino have confirmed that bitcoins are part of the reserves that Bitfinex uses to support the stablecoin. Nevertheless, both men still refuse to disclose the exact composition of assets in reserves. However, Ardoino reveals the only time Bitfinex acquired the bitcoins that are now part of tether’s reserves: the CTO says:
The bitcoins in reserves are a good amount left over from the previous acquisition we probably made in 2015/16…. The bitcoins, which we bought at a good price in 2015/16, will probably be enough for eternity.
The CTO also rejects the idea that Bitfinex is, in fact, spending tethers to buy bitcoins. He says this story makes no sense, especially when the company uses the BTC using the fiat money it has.
The lack of an independent audit
Meanwhile, when asked why the company is not hiring outside auditors to conduct a full audit, an elusive Hoegner says some steps have been taken in this direction as a sign of “good faith.” Such steps include advisory reports prepared by one accounting firm and a law firm, as well as a Bitfinex bankers report. Nevertheless, the general counsel reveals that Bitfinex is continuously “looking for ways to share information with the community, to be more open and transparent.”
Regarding the injunction, which has since been “significantly narrowed”, Hoegner confirms that it will expire on January 15. But even after the warrant has expired, the two companies and the AG will continue to engage in “constructive talks”. “
Hoegner then concludes by clarifying that the AG has not filed a lawsuit against Bitfinex and Tether and that the action against the two entities does not amount to a “criminal investigation.”
Would you agree that Bitfinex doesn’t spend tethers to pump the price of? BTC? Tell us what you think in the comments section below.
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