Bitfinex and Tether Break Silence, Go on Media Offensive

After months of radio silence, Bitfinex, the world’s largest cryptocurrency exchange, and Tether, the issuer of a dollar-pegged cryptocurrency, are responding to accusations of mismanagement.

In a statement emailed late Thursday to reporters, Ronn Torossian, a newly hired outside spokesman for both companies, blamed “questionable actors” for raising doubts about their financials and controls. Notwithstanding critics, he wrote, Bitfinex is “committed to becoming the most transparent crypto exchange in the industry.”

Specifically, he called out “Bitfinex’d,” the pseudonymous blogger who has thrown shade on the exchange in a series of lengthy Medium posts and YouTube videos.

“[W]henever someone lobs accusations and attacks behind the veil of anonymity, one has to question their motives.”

By contrast, Torossian went on to say, “[f]ar from hiding in anonymity, Bitfinex is led by a strong management team.” However, his statement did not name any of the managers, and as of Thursday evening they were still not listed on Bitfinex’s website.

The company is run by CEO Jan Ludovicus van der Velde, Chief Strategy Officer Phil Potter and Chief Financial Officer Giancarlo Devasini, Torossian said in a email.

Audit coming soon

The statement is also noteworthy for acknowledging that Tether is “related” to Bitfinex.

The link between the two organizations was long the subject of speculation but only recently confirmed by documents contained in the leaked Paradise Papers, which showed that Potter was a director and Devanisi a shareholder of Tether.

The New York Times cited the document in a recent lengthy article about the controversies surrounding Bitfinex. (Tether’s website did not identify any of its leaders as of Thursday night, either.)

On a related matter, Torossian addressed concerns raised by many of the companies’ critics about Tether’s reserves.

A full audit “will be released as soon as possible,” he wrote, noting that an interim report found the company had $442.9 million of cash as of Sept. 15 to “fully back” the tether tokens.

However, that report, from auditor Friedman LLP of East Hanover, N.J., contained some caveats. The account where the cash is held is in the name of a trustee, and Friedman said it could not vouch that Tether had any enforceable agreement with the trustee.

Similarly, Friedman said in the interim report that it did not evaluate the terms of the bank account and could not attest to Tether’s ability to withdraw funds or whether the money had been pledged for anything other than redeeming tokens. (The bank’s name is redacted in the publicly available version of the report.)

Reached by CoinDesk Thursday evening, Torossian said the disclaimers were standard for financial reports of privately held companies.

Meanwhile, Tether is “working closely with law enforcement” to investigate the breach it reported this month, in which $30 million worth of tether tokens were allegedly taken, Torossian wrote in the statement.

Quiet period

Returning to Bitfinex, Torossian also apologized for the exchange’s long silence, though he claimed the company’s growing exchange volume was the culprit.

Speaking of financial institutions, Torossian acknowledged that, like many cryptocurrency exchanges, Bitfinex has lost “a number of U.S.-based banking relationships.” Though he did not name any of them, Wells Fargo is a well-known example.

But the exchange “was able to maintain and add to its roster of banking partners around the world,” Torossian added, “providing the vast majority of its customers with a diversified and resilient banking network to provide consistent liquidity.” He did not name any of those banks, either.

Nor did Torossian directly address speculation by Bitfinex’d and others that the exchange has been printing tether tokens to drive up the price of bitcoin.

“Bitfinex abides by all existing laws and reporting requirements such as KYC/AML,” he wrote. The exchange “works closely with financial regulators, law enforcement, compliance personnel, and financial institutions to provide the highest possible level of protection and service for its customers.”

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