Produced by Odaily
Author |
Editor | Lu Xiaoming
Produced by Odaily
Author |
On April 26, a news announcement by New York State Attorney General Letitia James once again pushed Bitfinex and Tether, which has repeatedly experienced trust crises, to the forefront.
secondary title
according toBloombergBitfinex’s $850 million incident, how did the parties respond
according toBloomberg) to help it handle the $850 million, making the "deployment" of funds between Bitfinex and Tether legal and reasonable without any written contract or guarantee.
James said that Bitfinex’s $850 million investigation into the loss of funds began in 2018, when the company handed over $850 million of customer and corporate funds to Crypto Capital to process customers’ withdrawal requests. But in the following months, Crypto Capital failed to process these requests from Bitfinex, because the funds were frozen in several different banks in Portugal, Poland, and the United States. clear.
according towall street journalJames said that Bitfinex’s $850 million investigation into the loss of funds began in 2018, when the company handed over $850 million of customer and corporate funds to Crypto Capital to process customers’ withdrawal requests. But in the following months, Crypto Capital failed to process these requests from Bitfinex, because the funds were frozen in several different banks in Portugal, Poland, and the United States. clear.
according to
wall street journal
According to reports, the New York State Attorney General's Office stated that it has obtained a court order requiring Bitfinex to stop transferring funds from Tether's reserves to Bitfinex's bank account, prohibiting Bitfinex from borrowing from Tether, and stopping any dividends or other dividends to executives. And hand over documents and information.
The court also ordered Bitfinex and Tether to provide documents requested by James’ office to investigate potential fraud and to cooperate by May 3.
If related to criminal malfeasance, it would be the largest criminal case in the cryptocurrency space in the United States, similar to the Mentougou coin robbery in Japan in 2014.
After the news from the New York State Attorney General's Office was released, USDT showed a downward trend. According to the latest data from AICoin, it fell from 1.005USD to the lowest point of 0.957USD, a 24-hour drop of 3.58%, and the latest price of USDT is 0.97USD.
image description
Image source: AICoin
USDT is a USD-based stablecoin launched by Tether. 1USDT=1 USD. Tether promises that every USDT issued will have a USD 1 deposit in its bank account. However, the market has been holding various doubts about Tether and USDT. The stable currency is "unstable", the amount of funds in Tether's account is insufficient, the information of Tether's bank account is not public, and Tether has never released a credible audit report to prove that it has The corresponding dollar reserves, which makes many people doubt whether these dollar reserve funds exist.Shortly after the New York Attorney General's remarks, Bitfinex quickly responded to the matter. Bitfinex’s official report denied the claims of the New York Attorney General, saying that the $850 million loss was a rumor fabricated by the New York Attorney General maliciously. ” and stated that it has been actively working to exercise its rights and remedies and release these funds, and there is no loss. As for how the funds will be released, the announcement did not mention.
At around 17:17 pm on April 26, Zhao Dong, a shareholder of Bitfinex, posted in the telegram group that he had communicated with the Bitfinex official and confirmed several things from the Bitfinex official, responding to investors’ concerns. kind of suspicion:1. First, the Department of Justice froze Crypto Capital’s $850 million, and then the New York State Attorney General said that Bitfinex was insolvent. Bitfinex said this was a typical American underworld behavior (Odaily Note: On the Hong Kong official inquiry website, it can be seen that Bitfinex was registered in Hong Kong on March 8, 2013, and its registered address is "1308 Bank of American Tower". It is in the British Virgin Islands and does not belong to the United States. But on April 29, 2014, Bitfinex changed its name to Renrenbee.
However, the United States has always had the so-called "
long arm jurisdiction）
", means that when the domicile of the defendant is not in the state of the court, but as long as there is a certain "Minimum Contacts" (Minimum Contacts) between the defendant and the place where the filing court is located, and the claims made by the plaintiff are related to this contact, the court will treat the defendant With personal jurisdiction, a subpoena can be issued against the defendant, even if the defendant is out of state or even abroad.
In layman's terms: "Even if you are not with me, as long as your behavior has the minimum connection with me, I can control you." Therefore, the New York prosecutor can "consider that Bitfinex has users who are citizens of New York State, so they have the right to Jurisdiction".
Lawyer Guo Yatao of the chain law team told Odaily, “The essence of the long-arm jurisdiction of the United States is to exercise extraterritorial jurisdiction. Under the principle of long-arm jurisdiction, its jurisdiction is quite flexible, and most of its application is based on consideration of national interests. Considering the principle of "long-arm jurisdiction", I believe that most people also hope that the regulators will supervise Bitfinex, and generally speaking, this is beneficial to the majority of investors."2. Bitfinex denies any loss of assets and admits that the funds have been frozen. Bitfinex believes that it can fully cope with it.3. The frozen amount of 850 million US dollars is correct. It was frozen in several different banks in Portugal, Poland, and the United States. Bitfinex’s 2018 profit was about 400 million US dollars, and the expenditure was only 12 million US dollars. They used part of it The profit reserve is used to withdraw cash to clients.
4. Zhao Dong and Deltec (
) executives chatted, Deltec executives agreed that Bitfinex did not lose funds, and said that the New York State Attorney General has no enforcement power over Bitfinex, and has no right to further freeze the funds of Bitfinex and Tether.
5. Zhao Dong asked Giancarlo Devasini, an executive of Bitfinex, that 100% of the frozen funds can be unfrozen, but it will take a few weeks. Zhao Dong believes that these funds belong to users, not Bitfinex, and the US government has no right to freeze them.
As of press time, Tether officials have not responded to this.
secondary title
Does the New York State Court have jurisdiction over the case? Does the prosecution have the power to freeze funds?
1. Do New York State courts have jurisdiction over the case?
b) Based on the facts or evidence mentioned in the prosecution (NYSGA) indictment, Bitfinex and Tether have provided unlimited services to New York State users in the past, and some New York State users still participate in transactions, and they are in New York State Continuing to engage in business activities. Therefore, the New York State Court has very strong jurisdiction over the disputed matters in this case.
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2. On what law did the prosecution (NYSGA) base its lawsuit?
a) The New York State Martin Act (The Martin Act, New York General Business Law article 23-A, sections 352–353) empowers the New York Attorney General with broad enforcement powers to target securities offerings, sales, and purchases that may Investigate fraud. The Martin Act is stricter than most state and federal securities laws and carries both civil and criminal penalties for fraudsters. And even the US SEC can only take civil penalties against fraudsters, which is lower than the authority granted to the New York Attorney General by the Martin Act.
a) The prosecution has no right to freeze funds, but the prosecution can apply to the court for a preliminary injunctive relief and a permanent injunctive relief to freeze the defendant's funds or property through normal judicial procedures. As New York is the world's financial center, many financial institutions are headquartered here. Once the court finds that the injunction is necessary, the New York State Court can require many financial institutions to execute it.
according to The Block secondary titleTether quietly modified the collateral subdivision, suspected to be "filling holes" in order to cooperate with Bitfinexaccording toAccording to reports, on March 14, Tether quietly revised its collateral breakdown on its official website, announcing that each USDT now corresponds to a corresponding asset reserve, and these assets can now include: cryptocurrencies,cash equivalents
, and fromThird-party accounts receivable, also known as third-party loans. Previously, Tether also claimed that 100% of their asset reserve components came from US dollar reserves.Zheng Li, a senior financial analyst, said that you can understand when you see this, "Now I understand everything. Tether’s accounts receivable were originally lent to Bitfinex. No wonder the source of asset reserves needs to be modified. At the beginning, I didn’t understand why Tether had accounts receivable.
"Zheng Li believes that if Bitfinex can pay off the amount later, it will become abridge loanZheng Li also said, "If the USDT circulation market value is still 2 billion to 3 billion US dollars, 800 million US dollars of accounts receivable means a reserve ratio of about 70%, which is roughly equivalent to the reserve ratio of the Bank of England in 1790. rate", here Zheng Li regards Tether as a bank, and he believes that Tether has
factual
It has become a bank. He said that this is something that people in the circle have tacitly accepted, so Zheng Li believes that it will be sooner or later that Tether establishes a reserve system. But Tether is not a bank after all, and there is no clear law and regulators to define Tether as a bank.
After the $850 million incident was exposed, Bitfinex wallet addresses continued to see large transfers
according toAfter the news broke, data continued to show that Bitfinex’s hot and cold wallets had large withdrawals and transfers of BTC and USDT. As of press time, Odaily has counted five more eye-catching Bitfinex wallet transfer records:According to data from TokenAnalyst, approximately 17,250 bitcoins (approximately $89 million) were withdrawn from Bitfinex’s BTC cold wallet at 6:35 a.m. (GMT) on April 26.
according to
On-Chain Finance
According to Tokenview data, at around 15:03 on April 26, a large amount of BTC transfer occurred. From addresses starting with 3KQLSHE and 3JZq4at to addresses starting with 3AiX9oDh and 1Kr6QSy, a total of 17,377 BTCs were transferred, worth about $92 million, of which 1Kr6QSy Addresses starting with are marked as Bitfinex hot wallets by Tokenview.
At 22:19 on April 26, the Bitfinex wallet address transferred about 5 million USDT to the Tether Treasury wallet address.
secondary title
It will not have much impact on USDT in the short term, but may lead to its complete collapse in the long runtextIn this incident, Tether suspected that it "borrowed" money to help Bitfinex fill the funding gap. It did not inform its customers in advance and used the US dollar reserves. A crisis of trust due to undisclosed information. In this incident, Tether pushed itself into the vortex of public opinion, and the crisis of trust further escalated. Some people are not optimistic about the concept of stable currency because of this, so how much impact will this incident have on Tether and USDT? Will it affect USDT's market share and liquidity, and is the stablecoin market still worth looking at? On these issues, Odaily interviewed and collected the views of several opinion leaders, analysts and lawyers in the blockchain industry, enjoy:
Liu Changyong, director of the Blockchain Economic Research Center of Chongqing Technology and Business University, told the Odaily reporter, “Whether Tether uses USDT reserves to fill the hole for Bitfenix is unknown, Bitfenix only admits that funds have been frozen.
The current market value of Tether in circulation is 2.8 billion U.S. dollars. If 850 million U.S. dollars are misappropriated, and the remaining reserve assets have good liquidity and can guarantee payment, it will not be a fatal impact.What they need to worry about is that this will lead to further investigation and freezing of their reserve assets. "In addition, Liu Changyong also made an interpretation of the impact on the entire stablecoin market after the Tether outbreak of trust issues and how stablecoins should develop in the future, "The collapse of a country's currency does not represent the entire world. Fiat currency will collapse. Similarly, if a stable currency has problems, it does not mean that the stable currency is not established. Like any other currency, stable currency has instability and risks. Unless a currency is regarded as a belief, otherwise, we must facilitate , stability, value preservation, and risk to make trade-offs for various currencies.”Liu Changyong believes that stable currency is a transition form from legal currency to cryptocurrency, which has the stability of legal currency and the freedom of cryptocurrency. However, it is correspondingly more risky than legal currency, and more dependent on personal credit than cryptocurrency, which also brings risks.
Even compliant stablecoins are only subject to sovereign supervision and cannot guarantee the same solvency as fiat currencies.Just like Lehman's compliance, but there is no guarantee that it will not go bankrupt. Stablecoins are the product of the market during the development of cryptocurrencies. With their advantages of stability and circulation in the cryptography network system, there is a wide range of market demand.
Until the market depth of cryptocurrencies is stable enough to replace stablecoins, stablecoins will exist, and we need them to exist.
“"There is no need to discriminate or exclude it from a certain moral standpoint.What we need to do is to fully understand the advantages and disadvantages of stablecoins, and choose the way to use and hold stablecoins according to our own preferences for risks and benefits. "Liu Chang used the final analysis.
Xiao Lei, a well-known financial columnist and senior researcher in the gold market, also published his views on his personal official account. After this incident, he who was not very optimistic about the virtual currency economy seems to have become more indifferent towards the cryptocurrency market up. Xiao Lei believes that one of the reasons why Bitfinex dared to freely use 850 million US dollars of customer and corporate funds is that Bitfinex can use Tether’s funds to fill up at any time, and Tether can raise funds from the public by issuing additional USDT at any time.Although most investors participate in the transaction of decentralized assets, what they bear is a huge centralized credit risk.In Bitfinex's response, we can confirm that the actual controllers of Bitfinex and Tether should be the same, and the capital exchanges between the two companies are not bound by any third party. In addition, Bitfinex did not deny that it used the funds of Bitfinex customers and enterprises at will, which shows that Bitfinex can use the funds placed by users on Bitfinex at will, without the need to announce or explain. Xiao Lei analyzed. Therefore, Xiao Lei believes that as long as investors hold USDT in their hands, or put the currency on the exchange, the investor's assets may disappear in an instant. Before that, investors do almost everything. No, I can only choose to believe in the ability and moral level of the platform to control people.
Meng Yan, vice president of CSDN, told Odaily, "This time it is indeed possible to bring a big blow to USDT, because they have really gone out of line.
But this is not a failure of the stablecoin, it's just something wrong with the Tether stablecoin model. There are no saints in the world, opaque and unsupervised printing of money will lead to fraud, sooner or later."However, Meng Yan finally stated that he is still very optimistic about stable coins, and does not agree that Bitcoin is the cornerstone of the digital currency world. He believes that Bitcoin has been largely manipulated by USDT. Proof of the power of stablecoins.Xu Kun, vice president of strategy at OK, analyzed to Odaily, "The key to the stablecoin model is 'trust'. As an important part of the market infrastructure, stablecoins cannot maintain price stability, which will increase the systemic risk of the market. If there is no external Supervision only relies on self-discipline, which is very prone to various internal operations, and it is difficult to ensure the safety of funds and sufficient collateral. The behavior of embezzling reserves without authorization has harmed the interests of users and brought shocks to the market, which will shake Tether's trust foundation Compliance must be the direction of stable currency development. Only by adhering to the regulatory, auditable, open and transparent compliance principles can the credibility and value stability be maximized, and a complete and trustworthy transaction closed loop can be truly built. .”Jiang Huijie believes that this is almost the biggest challenge to Bitfinex/Tether under the existing regulatory system other than the hacking incident.
Due to its special location, New York State has always been the front line in the fight against financial crimes in the United States, which can represent the current US regulatory position on Bitfinex/Tether.However, the litigation process may last for a long time,It is difficult for USDT to be completely replaced in a short period of time, but the impact on its market share is continuous and far-reaching, and may even eventually lead to a complete collapse.
"Due to its particularity, the stablecoin market needs to connect fiat currency and virtual currency. It is difficult to completely escape legal supervision like many virtual currencies, because deregulation means the lack of legal protection.For stablecoins like Dai, which are native to virtual currencies, the barriers to popularization and limitations in mechanism design prevent it from becoming a mainstream stablecoin in the short term." Jiang Huijie said to Odaily.
Yang Zhou, the founder and CEO of Babel, believes that this incident will not have much impact on Tether in the short term.
Because the core point of this incident is that Tether did not inform customers in advance that their reserves have been embezzled, not that Tether has a payment crisis, if Tether has a payment crisis, then the consequences of this matter will be serious. Yang Zhou said that the biggest value of Tether currently lies in its liquidity. The liquidity of USDT is currently the best stable currency in the market, and investors all recognize it. The status of USDT's "boss" cannot be shaken. .
Yang Zhou also has another point of view. He believes that the reason why this incident will not have a great impact on Tether is because USDT has "kidnapped" too many institutions and exchanges. Taking Binance as an example, Binance's customers have about 2 With a leverage of more than 100 million USDT, if the USDT price plummets, Binance’s USDT will be squeezed, and they will not allow such a thing to happen.In Yang Zhou’s view, the outside world mainly considers the following factors when evaluating a stablecoin: 1. Value attribute, what currency or asset is anchored behind it; 2. Liquidity; 3. Whether the channel for legal currency entry and exit is safe and reliable; Wallet support 5. Usage scenarios. According to Yangzhou analysis, apart from the fact that Tether is not transparent enough in terms of value attributes, the other four aspects are doing very well, with a high market share and very good liquidity, and he believes thatStablecoins are still reached by consensus at present, because its value attributes are still very vague.
Li Zipeng, a senior analyst at Standard Consensus, analyzed the following points of view to Odaily. 1. First depends on the facts, whether Bitfinex really embezzled Tether’s margin for its own use. 2. If not, then the impact will be small; if yes, the short-term impact will be small, and the long-term impact cannot be judged; 3.Because currently USDT accounts for more than 98% of the daily transaction volume of all stablecoin projects, only when there is a redemption risk event, it is a fatal damage; now this is only a misappropriation of reserve funds, and users have no sense of actual damage, and the short-term impact is not great; But if the reserve fund is misappropriated at will for a long time, it will affect its solvency and submit to the risk of payment.
Xiong Yue, vice president of Bixin, made a public comment on the $850 million Bitfinex incident, saying: “1.Bitcoin is the cornerstone of the real digital currency world2. Most of the people who entered the field after 16 years actually had a hard time understanding the situation at that time. BFX (Bitfinex) and Tether must have done something wrong, but at that time, it was not too wrong. "
Xu Yingkai, the founding partner of BlockVC, also publicly stated that under the condition that Tether reserves have the ability to pay,
If there is a credit crisis in USDT, the biggest beneficiary is not BTC, but other so-called stable coins with compliance endorsement, such as GUSD and USDC, etc.
