Following the revelations made by New York AG accusing Bitfinex of using $700 million Tether funds to cover up the $850 million goof-ups of clients fund, the crypto market has reacted sharply to the development.
Leading cryptocurrencies including Bitcoin, Ethereum, Bitcoin Cash, Ripple are all trading lower by 2-6 per cent. The overall market cap plummeted by $10 bn post the news broke out and is currently at $170 bn level.
Tether (USDT) is now trading below the $1 level, as questions are being raised whether they have enough dollar reserve to back their entire coin circulation. Of course, the market confidence has been shaken and could trigger the next fall in crypto prices, but currently, the market is holding onto the critical levels and has to be seen how this news develop.
Other dollar-pegged stablecoins like USDC, TrueUSD and GUSD are all tradings in premium with gains up to 2 per cent.
Bitfinex, the exchange in question is also witnessing the massive withdrawal of funds in the past 24 hours and as per estimates, around $165 million have been already pulled out by traders. This includes, BTC funds worth $90 million leaving the wallet.
Incidences of wrongdoings by exchanges around the world are continuously hitting the market, taking away the investor’s confidence. Incidences involving exchanges including Cryptopia, QuadrigaCX have raised questions about the operational structures of exchanges and need for a regulatory binding.
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