Popular exchange Bitfinex, can’t seem to stay out of the news these days as transparency seems to elude the exchange at every turn. According to Bloomberg, the Puerto Rican island’s Noble bank has been a banking service for Bitfinex since as early as the latter part of 2017. Coincidentally, at the same time relations between Noble bank and Bitfinex began, Puerto Rico experienced a rise of 248% in bank deposits at the end of last year. What’s even more interesting, or better word, suspect, is that Noble doesn’t hold any of the money themselves, but rather acts as an intermediary to a large bank based in New York. Bitfinex has had a very colorful history with the number of previous banking relationships its held, and has created a high level of controversy with how they are able to secure the amount of US dollars needed when historically lacking a stable long-term banking relationship. Rumours of business between the bank and exchange were even reported back in early as March of 2017 from a document published by Bittrex showing a relationship between Bitfinex and its sister currency Tether (USDT), using the bank’s services. The document from BitMEX also showed an increase in the value of Tether by 215% during the last quarter of 2017. Numerous members in crypto have been very vocal about their perspective on the matter, stating that they believe Bitfinex is using Tether to artificially inflate the place of Bitcoin and related cryptocurrencies. If so, this would be classic market manipulation, as there has never been an accurate assessment on whether all USDT is actually backed 1:1 by US cash, and since there still hasn’t been any formal audit since the inception of the exchange, no one knows exactly how much real money is there.

Software engineer and security analyst, Tony Arcieri commented:
“I, and many others, suspect Tether is being used to effectively counterfeit hundreds of millions of dollars of perceived value, which are being immediately reinvested into Bitcoin.”

A formal inquiry may be right around the corner for Bitfinex as the U.S. Justice Department has released their initiative to work with the U.S. Commodity Futures Trading Commission (CFTC), launching a criminal probe into Bitcoin and other cryptocurrency markets, hoping to discover whether the prices were artificially manipulated in any way. This could link the uncertainties as to whether Tether was manipulated, along with a host of other dubious practices that are suspected to be occurring. If such evidence does surface, it will create a huge rift with investor confidence. This, however, would also be great for crypto in the long term as tighter regulations in market transparency would be implemented. Not that we think any of that may really matter, as decentralized exchanges would and will, eliminate the potential for trickery, and the fallout from it. Still, justice needs to be served regardless.

After all, stable coins, like USDT, are becoming very popular because of their ability to shield users from intense market volatility. However, the main selling point is that the cash kind of needs to be there to back it up. Bitfinex, it’s time to either receive an audit, or close your doors.