US Financial Regulators Are Investigating a Major Cryptocurrency Transaction
According to the latest tech news, US Commodity Futures Buying and Selling Comission (CFTC) asked traders Bitfinex and company Tether to submit their official documents. The US regulators started probing one of the world’s largest cryptocurrency trading platforms, suspecting ties to a controversial digital currency.The subpoena letters were sent to Bitfinex and Tether, a company that offers digital currency tied to the value of the US Dollars. Tether has received a lot of criticism in the cryptocurrency company, with speculations circulating stating that Tether may not actually hold enough dollar reserves to back up the claim that the cryptocurrency’s value is tied to the dollar.
On Tuesday 30th January 2018, the cryptocurrency markets sunk significantly in reaction to this news. Bitfinex and Tether are closely related, even sharing the same CEO, Jon Ludovicus van der Velde. Bitfinex and Tether released a statement stating that they routinely received legal process from law enforcement agents and regulators for conducting investments.
Within cryptocurrency exchanges, Tether’s coins have become a popular substitute for US Dollars. Instead of selling cryptocurrencies such as Bitcoin and Ethereum and potentially incurring higher fees and longer transaction times, investors can easily swap their holdings of Tether within an exchange.
Each Tether is ostensibly worth roughly one U.S. dollar, with $2.3 billion outstanding tokens in existence. The company claims that this money is backed by actual U.S. dollars it is holding, but critics have doubted this.
The company has yet to provide evidence that would prove the claim, and a recent audit attempt appears to have fallen through.
Tether’s relationship with auditing firm Friedman LLP “dissolved” because the process was taking too long, according to a statement it provided cryptocurrency news website CoinDesk on Saturday.
The firm did note that it had not yet assessed the “terms of the bank accounts” or Tethers ability to access funds from the accounts.
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