A Non-Exhaustive List of Bitfinex and Tether’s Misdeeds and Red Flags
Channel: Bennett Tomlin
Date: 2021-07-31

Read more: https://bennettftomlin.com/2021/06/21/a-non-exhaustive-list-of-bitfinex-and-tethers-misdeeds-and-red-flags/

There were unbacked Tethers.

Tether advertised no-KYC swaps between Bitcoin and Tether.

Bitfinex was founded by an active participant in and defender of ponzi schemes, who after losing much of his bitcoins in a ponzi scheme, tried to start his own high yield lending program. When people were hesitant to hand their funds over to such a passionate ponzi participant he quickly moved on and founded Bitfinex.

Bitfinex was started by using stolen code written by a teenager, the code had known exploits. (Archive) 

Tether was founded by Brock Pierce. Brock Pierce once left the United States with indicted child sexual predator Marc Collins-Rector to go to Spain (archive) where the two lived together. They were both arrested and significant amounts of child pornography were found in the house. (Archive) Brock was released without being charged.

Tether’s first Chief Compliance Officer was Matthew Tremblay. If you can confirm he is a real person, please let me know. I cannot track him down. Reverse image search on his picture returns nothing, he is no longer mentioned on Tether’s website, and I cannot find his LinkedIn, Twitter, Instagram, blog, conference speeches, articles, or any other of the modern online detritus our lives generate.

Update 6/24/21: I have now seen at least one social media account for Matthew Tremblay and he does appear to have a corporeal form. It is still unclear what he did before Tether and what he does now.

Update 6/22/21: Craig Sellars one of the co-founders of Tether does say he worked with Tremblay during his time at Tether.


http://web.archive.org/web/20210622181938/https://twitter.com/OmniCraig/status/1407402461942489094
The Chief Financial Officer of both Bitfinex and Tether sold pirated software (archive) and had to pay Microsoft for it.

The General Counsel of both Bitfinex and Tether was the Director of Compliance for Excapsa. (Archive) Excapsa was the parent company of Ultimate Bet, and during his tenure there Ultimate Bet had a god mode that allowed some players to see other players cards. (Archive)  Stu was the Director of Compliance for a non compliant poker site.

Bitfinex had to pay a settlement to the CFTC for offering illegal off-exchange transactions. (Archive) (My copy)


https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf (Archive) (My copy)
Tether originally promised to always be backed 1:1 by cash. They are now 3% backed by cash.

Tether commingled client and corporate funds. Bitfinex commingled client and corporate funds. Bitfinex and Tether commingled their commingled funds together. Bitfinex and Tether gave over $1 billion in these funds to alleged money launders without signing a contract or agreement of any kind. (Archive) (My copy)

The payment processor who Bitfinex and Tether had given funds to is implicated in embezzlement, bank fraud, wire fraud, counterfeiting, and money laundering for the Colombian Cartels (allegedly through Bitfinex).

Update 6/22/21: Separately, other money launderers for the cartels were using casinos and tethers to launder their funds, along with trying to use Tethers to bribe federal agents. (Archive) (My copy)

Tether has lied every single day for the last several years on their transparency page about the number of quarantined Tethers. Either they have some secret motivation for this or a $65 billion dollar fund fail to add correctly every single day when they update it.

Bitfinex and Tether have used bots and sockpuppets to manipulate social media sentiment about their companies.

There are extraordinarily suspicious features surrounding the Tether hack, no formal explanation has ever been given.

After this hack Tether used their dominant economic position on the Omni layer to force a hard-fork. (Archive) After this a feature was added so that Tether would always be able to freeze any tether in circulation.

No post-mortem or security audit was provided after either Bitfinex hack.

Tether promised to be regularly audited, they have never been audited.

Tether at one point had hired Friedman LLP to complete an audit, but the relationship ended due to the “excruciatingly detailed procedures” that Friedman was following. (Archive)

Bitfinex promised an audit after their 2016 hack, they have never been audited.

After the 2016 hack Bitfinex claimed to socialize the hack across ALL accounts. (Archive) According to reporting by Nathaniel Popper this was a lie, Coinbase did not receive the haircut.


http://web.archive.org/web/20210622002534/https://twitter.com/nathanielpopper/status/933130228175552513
Bitfinex promised they would provide an accounting of their methodology to calculate the haircut amount. (Archive) No such accounting was provided.

Read more: https://bennettftomlin.com/2021/06/21/a-non-exhaustive-list-of-bitfinex-and-tethers-misdeeds-and-red-flags/