Bitmex: Tether ‘Possibly’ Has Enough Cash Reserves, Could Still Be Shut Down
A report on Tether published by Bitmex Research shows that while it ‘possibly’ has enough fiat reserves, it is at risk of a shutdown by regulatory bodies.
Bitmex Research released an in-depth report on Tether today, Feb. 19, detailing the reasons why Tether is most likely backed by sufficient fiat reserves after all, and what problems with regulatory bodies Tether will most likely encounter in the future.
Tether is a digital token backed by fiat currency, supposedly pegged 1:1 with the US dollar. Due to Tether’s lack of enough publically released bank audits, there are rumors that Tether does not actually have enough fiat in reserves to redeem all Tether tokens with US dollars if the need would arise.
The Bitmex report attempts to refute those rumors by showing a possible correlation between the rising cash reserves of the International Financial Entities (IFE) banking category in Puerto Rico, under a section entitled “The lack of transparency may not indicate fraud.”
Cointelegraph recently reported that Puerto Rico may be emerging as a “crypto tax paradise.”
The Bitmex reports puts forward Puerto-Rican-based Noble Bank as a possible candidate for holding Tether’s cash reserves, mainly because it is the one of the two full-reserve banks in Puerto Rico that publicly operates with crypto.
However, there is no way yet to know for certain where Tether’s cash reserves are located despite the Bitmex report, for although their website’s “Transparency” page lists their current balances and claims they are “regularly audited” and “fully transparent,” the company actually dissolved ties with their New York-based auditor in January before releasing any full audits publicly.
The report also covers the Nov. 2017 hack of around $31 mln from Tether, which led to the company, in essence, demanding users upgrade their software in order initiate a hard fork and freeze the stolen funds.
The Bitmex report writes that this “demonstrated that Tether is effectively in complete control of the ledger, as they can force a hard fork at will and reverse any transaction — although there may not have been any doubt about Tether’s control beforehand.”
The report then questions why Tether “bothers to put the database on the Bitcoin and Ethereum blockchains at all,” arguing that it would be actually more cost-efficient for Tether to not pay miner fees and create its own public database.
The report also brings up the subpoenas delivered to Tether and the Bitfinex exchange in Dec. 2017, after which relationship between the two companies was officially disclosed, i.e. that they have an almost identical mana