A Non-Exhaustive List of Bitfinex and Tether’s Misdeeds and Red Flags
This is a living document that I intend to continue to update as I continue to research Bitfinex and Tether. I hope it will serve as a useful reference material for anyone who needs to try to keep in mind their many inappropriate behaviors. If you find any I missed, feel free to leave a comment. If you believe I made a mistake then feel free to leave a comment. It is not an introduction or summary. For that you can look here.
Bitfinex was founded by an active participant in and defender of ponzi schemes, who after losing much of his bitcoins in a ponzi scheme, tried to start his own high yield lending program. When people were hesitant to hand their funds over to such a passionate ponzi participant he quickly moved on and founded Bitfinex.
Bitfinex was started by using stolen code written by a teenager, the code had known exploits. ( Archive)
Tether was founded by Brock Pierce. Brock Pierce once left the United States with indicted child sexual predator Marc Collins-Rector to go to Spain ( archive) where the two lived together. They were both arrested and significant amounts of child pornography were found in the house. ( Archive) Brock was released without being charged.
Tether’s first Chief Compliance Officer was Matthew Tremblay. If you can confirm he is a real person, please let me know. I cannot track him down. Reverse image search on his picture returns nothing, he is no longer mentioned on Tether’s website, and I cannot find his LinkedIn, Twitter, Instagram, Facebook, blog, conference speeches, articles, or any other of the modern online detritus our lives generate.
The Chief Financial Officer of both Bitfinex and Tether sold pirated software ( archive) and had to pay Microsoft for it.
The General Counsel of both Bitfinex and Tether was the Director of Compliance for Excapsa. ( Archive) Excapsa was the parent company of Ultimate Bet, and during his tenure there Ultimate Bet had a god mode that allowed some players to see other players cards. ( Archive) Stu was the Director of Compliance for a non compliant poker site.
Tether originally promised to always be backed 1:1 by cash. They are now 3% backed by cash.
Tether has lied every single day for the last several years on their transparency page about the number of quarantined Tethers. Either they have some secret motivation for this or a $65 billion dollar fund fail to add correctly every single day when they update it.
Bitfinex and Tether have used bots and sockpuppets to manipulate social media sentiment about their companies.
There are extraordinarily suspicious features surrounding the Tether hack, no formal explanation has ever been given.
After this hack Tether used their dominant economic position on the Omni layer to force a hard-fork. ( Archive) After this a feature was added so that Tether would always be able to freeze any tether in circulation.
No post-mortem or security audit was provided after either Bitfinex hack.
Tether promised to be regularly audited, they have never been audited.
Tether at one point had hired Friedman LLP to complete an audit, but the relationship ended due to the “excruciatingly detailed procedures” that Friedman was following. ( Archive)
Bitfinex promised an audit after their 2016 hack, they have never been audited.
After the 2016 hack Bitfinex claimed to socialize the hack across ALL accounts. ( Archive) According to reporting by Nathaniel Popper this was a lie, Coinbase did not receive the haircut.
One point that didn’t fit in the story: After getting hacked in 2016, Bitfinex said it gave every customer a 36% haircut to cover losses. But at least one customer, Coinbase, got a better deal after threatening to sue, multiple sources told me.
- Nathaniel Popper (@nathanielpopper) November 22, 2017
Bitfinex promised they would provide an accounting of their methodology to calculate the haircut amount. (Archive) No such accounting was provided.
When Bitfinex lost banking with Wells Fargo they sued, in what Phil Potter later described as solely an attempt to ‘buy time’.
Tether has provided no explanation for how the above combination of events is possible, I tried to provide the version that gives them the maximum benefit of the doubt here (note I still consider this version of events unacceptable):
The bank Bitfinex and Tether was using after this point was Noble Bank. This bank was founded by Brock Pierce, the co-founder of Tether, and Eugene Sullivan (who would later write a ‘not-attestation’ for Tether) was on the board. Freeh who also was part of this ‘not-attestation’ had previously worked with Brock at Sunlot as part of his attempt to purchase Mt. Gox.
The day after releasing a letter from Deltec bank purporting to show that Tether was fully backed Bitfinex took hundreds of millions from the account.
Tether is one of the largest players in the commercial paper market, yet no one seems to have heard of them.
Originally published at http://bennettftomlin.com on June 22, 2021.