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0 pointsceejayoz7y ago0 comments

Or borrowed it from Bitfinex's customers' holdings before engaging a consulting firm to check their balances.

0 comments

"Borrowed" might be strong.

We don't know how strong the relationship between these companies is. One possibility is that Bitfinex wants to allow customers to immediately withdraw any USD deposits to other exchanges that accept Tether-USD. If that is the case, then effectively all deposits into Bitfinex are immediately "sold" to Tether in exchange for Tether-USD. That would mean that Bitfinex does not have any USD at all. Therefore the balance of USD in Tether's bank accounts would include all Bitfinex deposits.

Except for the opacity involved, nothing here would actually be misleading or obviously unethical; whether it is illegal is another question.

gvhst7y ago

While I am not ruling out any shenanigans (and would only really trust an audit from a big 4 firm, if that), the report says that their cash is unencumbered. From investopedia [1], "Creditors do not have any claims to assets that are unencumbered, as there are no associated debts relating specifically to the assets."

[1]: https://www.investopedia.com/terms/u/unencumbered.asp

ceejayozOP7y ago

From the memo:

> FSS makes no representation regarding the sufficiency of the information provided to FSS and all inquiries made by FSS have been directed to the Client and/or third party personnel responsible for maintaining such information, and the data has been obtained from the Client and/or third party personnel responsible for maintaining such information.

In other words, "unencumbered" here means "Tether told us they're unencumbered".

devilmoon7y ago

I work for a big 4 although not as an auditor. Do not trust audits by big 4 firms.

ttul7y ago

Oooh even better

j / k navigate · click thread line to collapse