Bitfinex General Counsel Stuart Hoegner has rejected the notion that only 74% of the Tether Stablecoin in circulation are fully hedged. Hoegner insists that the stablecoin is fully backed by assets that include cash, cash equivalents, as well as bitcoin. However, both Hoegner and the company’s CTO, Paolo Ardoino, are pushing against the narrative that Bitfinex is involved in a conspiracy to raise the price of Bitcoin.
The loan to Bitfinex
In one (n interview With Peter McCormack, Bitfinex’s General Counsel alleges the misunderstanding that USDT is not entirely attributable to an affidavit he believes has been taken out of context. The contents of the affidavit submitted by Hoegner on April 30, 2020 in the context of the “New York Litigation with the Attorney General” became public knowledge as the USDTIts market capitalization was only $ 2.1 billion.
According to this affidavit, around 74% of the backup copies were “cash and cash equivalents”. On the flip side, the remaining 26% was a $ 550 million loan to the company that is “fully serviced”. The General Counsel explains that the loan’s share of stablecoin’s market cap has increased from $ 2.1 billion to its current $ 22 billion USDT Reserves shrunk to 2.5%.
In the meantime, both Hoegner and Ardoino have confirmed that bitcoins are part of the reserve assets that Bitfinex uses to support the stablecoin. Even so, both men refuse to disclose the exact composition of the assets in the 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 the reserves are a good residual amount from the past acquisition we probably made in 2015/16. The bitcoins that we bought for a good price in 2015/16 will likely last forever.
The CTO also rejects the idea that Bitfinex is actually issuing tethers just to buy bitcoins. He says this narrative doesn’t make sense, especially if the company can just buy it BTC with the fiat money it has.
The lack of an independent review
When asked why the company does not hire external auditors to conduct a full audit, an evasive Hoegner says that some steps have been taken in that direction to demonstrate “good faith”. These steps include consulting reports from an accounting firm and law firm, as well as a report from Bitfinex bankers. However, the General Counsel reveals that Bitfinex is constantly looking for ways to share information with the community, be more open and transparent.
With regard to the court order, which has since been “severely restricted”, Hoegner confirms that it will expire on January 15th. But even after the ruling has expired, the two companies and the AG will continue to have “constructive talks”. ”
Hoegner concludes with the clarification that the AG has not filed a lawsuit against Bitfinex and Tether and that the lawsuit against the two companies does not constitute a “criminal investigation”.
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