Bitfinex’s general counsel Stuart Hoegner (Stuart Hoegner) denied that only 74% of the tether stablecoins in circulation are fully supported. Hogner insists that stablecoins are fully backed by assets including cash, cash equivalents, and Bitcoin. However, both Hoegner and the company’s chief technology officer Paolo Ardoino are opposed to the claim that Bitfinex is involved in a conspiracy to increase the price of Bitcoin.
Loan to Bitfinex
In an interview with Peter McCormack, Bitfinex’s chief counsel claimed that the misunderstanding was that USDT was not fully supported, which was due to his affidavit of inauguration, which he said was done out of context. When the market value of USDT was only $2.1 billion, the content of the affidavit submitted by Hoegner on April 30, 2020 became publicly known as part of the “New York and Attorney General’s litigation.”
According to the affidavit, approximately 74% of tether support is in the form of “cash on hand and cash equivalents”. On the other hand, the remaining 26% is in the form of a US$550 million loan to “provide full service” to the company. The general counsel explained that as the total market value of stablecoins has increased from $2.1 billion to the current $22 billion, the share of loans in USDT reserves has shrunk to 2.5%.
At the same time, both Hoegner and Ardoino have confirmed that Bitcoin is part of Bitfinex’s reserve assets to support stablecoins. Despite this, the two refused to disclose the exact composition of assets in the reserve. However, Ardoino did reveal that Bitfinex has acquired Bitcoin, which is now part of Tether’s reserves: the CTO said:
In the acquisitions we made in the past 2015/16, the bitcoin in the reserve is still a considerable price. The bitcoins we bought at high prices in 2015/16 may be enough to keep them forever.
The CTO also dismissed the idea that Bitfinex was actually issuing restraints just to buy Bitcoin. He said this statement is meaningless, especially when the company can simply use the fiat currency it owns to buy BTC.
Lack of independent audit
At the same time, when asked why the company did not hire external auditors to conduct a comprehensive audit, an evasive Hoegner said that some steps have been taken in this direction to show “sincerity.” These steps include consulting reports produced by an accounting firm, law firm, and reports from Bitfinex bankers. Nevertheless, the general counsel indicated that Bitfinex has been “looking for a more open and transparent way to share information with the community.”
Regarding the court injunction that has since been “substantially reduced”, Hoegner confirmed that it will expire on January 15. However, even if the ban expires, the two companies and AG will continue to conduct “constructive negotiations.” “
Finally, Hoegner clarified that the stock company has not filed a lawsuit against Bitfinex and Tether, and that the lawsuit against these two entities does not constitute a “criminal investigation.”
Do you agree that Bitfinex will not issue a price that binds Bitcoin? Tell us what you think in the comments section below.
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