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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Tether Turmoil Twist: Stolen Reserves Proves Crypto Stablecoin Was Once Backed

Tony "The Bull" Severino
Tony "The Bull" Severino
1 year ago
3 mins read

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The crypto community is in an uproar following the New York State’s Attorney General’s office accusation that prominent crypto exchange Bitfinex – tied closely to the controversial stablecoin Tether – had hidden a $850 million loss at the hands of a capital management company.

While the news caused a steep, widespread selloff across the crypto market, there is some good news buried deep within the Tether turmoil: the fact that $850 million was stolen from Bitfinex could be the best proof yet that Tether is or was backed by fiat reserves as the parent company claims.

Erik Voorhees: Bitfinex “Drama” Disproves The Bitfinex’ed Conspiracy Theory

Tether and its sister company Bitfinex, both have been the subject of much controversy in recent years. Tether, has been accused of a full gamut of shay behaviors, but none so damning as the claim that all Tether’s in reserve aren’t backed by a corresponding US dollar. Tether has also been at the center of an investigation on Bitcoin price manipulation, and has had a negative reputation across the crypto industry.

Regardless of the negativity and controversy surrounding the stablecoin, it’s widely used by traders seeking a safe haven from falling cryptocurrency prices.

Related Reading | Tether And Bitfinex Legal Imbroglio Tanks Bitcoin Price By 5.8% In Minutes

But last night’s news saw crypto investors fleeing for the safety of other stablecoins, and even Bitcoin, as the price of the leading crypto bounced as investors fled Bitfinex by cashing out their Tethers for BTC, and then moving them off the exchange en masse. The exodus was publicized via Twitter, highlighting each blockchain transaction moving funds away from the accused exchange.

Ironically, this latest Bitfinex drama may be the one thing that disproves the “Bitfinex’ed” conspiracy theory. If USD in that amount was seized/stolen/held by Crypto Capital, then the USD backing Tether DID actually exist after all. @Bitfinexed claim was that USD never existed.

— Erik Voorhees (@ErikVoorhees) April 26, 2019

Despite all the turmoil surrounding Tether and the crypto space at the moment, ShapeShift CEO Erik Voorhees, concludes that the controversy might just be the best evidence yet that “disproves” Bitfinex’ed’s theory that Tether’s weren’t 1:1 backed by a corresponding US dollar as the company claims.

Bitfinex is accused of hiding a loss of $850 million, due to their Panama-based capital management company, Crypto Capital, stealing the funds. Bitfinex is further accused of using nearly $700 million of the company’s fiat reserves allocated for Tether to cover up the loss.

Related Reading | Tether Treasury Mints $300 Million of Stablecoin: What Could It Mean for Bitcoin Price?

However, as Voorhees points out, if the reserve fiat didn’t exist, Bitfinex would likely have not been able to cover the loss, and would have went under. The fact that Bitfinex was able to borrow from the reserve to cover the loss suggests that the reserves were indeed fully backed as the company has asserted from the very beginning.

Following the New York AG’s accusations last night, the price of all major cryptocurrencies, including fell 7% or higher. Tether has also dropped in price following the news, and capital has begun entering other stablecoins in the market, which are up roughly 2% on the day.

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Tony "The Bull" Severino
Tony "The Bull" Severino

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Read more

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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