Bitcoin Manipulation, Binance, Bitfinex, Tether, And That 1.1 Million BTC

Binance Coin BNB Weiss Ratings 2019

Bitcoin could still yet break $6,000 as momentum holds, but charges of manipulation and calls for Binance to delist Tether, the 1.1 million bitcoin at the centre of a long-running Florida court case and a New York State injunction threatening to cripple the operations of Bitfinex, are converging to provide market participants with plenty to chew on, if not choke over. At the centre of the angst is the British Virgin Islands registered Bitfinex exchange and the stablecoin operated by its sister company Tether.

Such is the dominance of the Tether (USDT) stablecoin despite its many competitors, the vortex its woes have set in motion threatens to suck other major crypto players into the storm.

Ordinary crypto folks are not amused.

Investors and traders have had to suffer the fun and games from Tether for a while now, from its byzantine corporate structure and relationships, its failure to audit its accounts, to its lack of transparency on issuance and dollar backing. Patience is wearing thin.

Losing patience with Tether so why doesn’t Binance delist?

Are we at a tipping point? There is a rising clamour, as
evidenced on Reddit and Twitter, for Tether to be removed from exchange trading

That in turn has been greeted with incredulousness bordering
on fear from those who beg to differ regarding the stablecoins suitability for
the task given mounting doubts.

They naturally remind critics of the pivotal role of the
currency and the destabilising implications a rapid draining of USDT liquidity from
the market would entail.

The ire of those clamouring for action is beginning to focus
on Binance.

It will be recalled that Binance was relatively quick to
make the unprecedented decision to remove a major altcoin when Bitcoin SV was unceremoniously
dumped. The behaviour of Craig Wright was blamed for forcing that decision.

In response to Binance’s actions, which were led very
publicly by chief executive Changpeng Zhao (aka CZ), Wright has labelled the
exchange a “money laundering bucketshop”. That’s a serious charge against arguably
the world’s largest crypto exchange.

A post from Chico Crypto on YouTube has got people talking. The YouTube channel claimed that the bitcoin price is being manipulated by whales and right up there leading the way is Binance, apparently.

Whale manipulation doesn’t add up, but Binance is treating Tether differently

The excitable reporter claims that the 780 million Tether at
the holding address of the funds had moved to a new address in a series of 10
transactions. But this new address now only 42 million still there. The transfer
of funds had been previously telegraphed by CZ  –  he announced
in advance that a large amount of USDT would be moving to a cold wallet.

The Chico YouTube story claims that the funds were dispersed in thousands of small transactions. A Reddit poster who goes by the name DontTrustJack lauds the “solid research” by the YouTube channel the truth of the matter seems to be altogether different to that imparted by the YouTube source.

But before we come to that, why if you are trying to
manipulate the price and “dump on retail investors” would you tell everyone
that you’re about to shunt hundreds of millions of dollars’ worth of Tether
into a cold wallet?

And why would you then disperse it to “thousands” of addresses
for all to see? And why thousands of addresses? Ok so a bot could co-ordinate
their movements and smaller amounts are less suspicious perhaps to offload “to
crash the price”, but “whale manipulation” has usually been assumed to take
more manageable forms.

However, it turns out that the funds were not spread across thousands of exchanges at all but to one, where the Tether still resides – the sum of 609,616,768.6018903, with the last transaction made on 1 May. Here’s the explorer link.

599 million Tether was moved on 30 April, the day after CZ’s

Ok so forget about the Binance bitcoin price manipulation,
but there is a more serious point regarding Tether and Binance. If BSV can be kicked
off the exchange because Wright is deemed to be behaving badly then why not Tether
for far greater apparent misbehaviour.

Surely it is a very big deal that Tether is not backed 100%
by cash or cash equivalents?

Craig Wright, Kleiman and the 1.1 million Bitcoin (BTC)

And while we are on the question of whales, why is no one
talking about the 1.1 million bitcoin at the centre of the Florida court case, in
which the Kleiman estate accuses Wright of effectively relieving Dave Kleiman
of BTC ownership through an opaque partnership structure and a blind trust whose
other trustees and beneficiaries are not known.

Kleiman lawyers are now seeking full discovery of all those
associated with the blind trust.

The lawyers have also successfully demanded that Wright provide
an exhaustive list of bitcoins owned in 2013 (when Kleiman died) and the data
pertaining to transfer to the blind trust. He has until 15 May to comply.

Although the Wright haters don’t like to confront the possibility,
it could turn out that Wright was involved with bitcoin fairly early on, if not
at the beginning as he claims. Up until now he has told the court that the
bitcoin records at issue are not available to him because the blind trust has control.
If he furnishes the court with proof of ownership then that means there are
truly 1.1 million extremely tightly held bitcoins out there.

Then again, the haters could be right and Wright was not in
at ground floor, not even the fifth – in which case there isn’t a stash of 1.1 million
BTC to be unloaded when the court case finishes.

If that turns out to be the case it would be bullish, as a
huge chunk of hitherto assumed “missing” bitcoin would no longer hand over the
market. Less supply, all things being equal, should mean a firmer price going

Bitfinex, the Paradise Papers and a risky IEO

Back with Bitfinex, things are hotting up. As we know, The New York Attorney General (NYAG) accuses Bitfinex of trying to hide its resort to Tether funds to fill a gapping whole in its finances.

The void in the balance sheet is as a result of payment
processing firm Crypto Capital of Panama refusing to hand over $850 million of Bitfinex
money. The NYAG is seeking an injunction to prevent the extension of further
loans  from Tether to Bitfinex.

Bitfinex for its part says the state prosecutors are trying to kill the company and that the previous advance of funds and line of credit from Tether was arranged by an independent third party.

That’s not very convincing given that the Paradise Papers data leak revealed that Giancarlo Devasini and Philip Potter set up Tether in 2014 . Giancarlo Devasini is the chief executive of Bitfinex.

However, that third party that was at the centre of the supposed “hands off” loan deal has not been disclosed and the NYAG is understandably seeking more information and is challenging what it claims are “discrepancies” in Bitfinex’s account.

All this is going on while Bitfinex is trying to land its
Initial Exchange Offering (IEO) of its LEO coin, and pre-orders are reported to
have started.

Bitfinex is looking to raise $1,000 billion and it is
surprising to say the least that it is still going ahead.

The cynics, or realists depending on your point of view, might
say it has no choice.

The Bitfinex/Tether story is one that never seems to end,
although finality may be arriving sooner rather than later.

We should hear more from the New York court early week, but
whatever the outcome regarding the loan and credit line, investors toying with
taking a look at the IEO will need to be very brave.

And LEO is a utility coin for the exchange and nothing more.
There is no claim to any profits that Bitfinex might generate, just cheaper
trading fees.

You get the feeling that Bitfinex could be arriving late to
the party with this IEO thing. Binance has already eaten the pie.

Bitfinex, like the rest of us, clearly noticed that BNB is the
only major coin to have reached an all-time high and to have achieved that feat
in the midst of the dark crypto winter.

But Binance has a lot more going for it at this juncture
than Bitfinex. It has two fiat-to-crypto operations, its Launchpad ICO
business, its own blockchain and DEX and pole position in the crypto-to-crypto
exchange world.

Tron’s Tether swap risk

And before the Bitfinex/Tether vortex is done, let’s mention
Tron. It has sensibly decided to stall indefinitely the start of its reward
programme intended to encourage people to start using its homegrown version of

However, Tron boss Justin Tron is still letting holders of
Tether swap it 1:1 for the Tron version.

That opens Tron up to what you might call Tether default
risk. Tether of course isn’t a credit instrument but it is not backed 1:1 by

In fact a quarter of that value is missing as tether
admitted in court to 74% backing not 100%.

That doesn’t become matter as long the majority of holders
do not attempt to redeem.

But if a stampede happens down the line, and assuming that
Tron gets substantial inflows from Tether holders before then, then the Tron
treasury could be left holding an asset of vanishing value.

All these storm clouds could be dissipated if the market had
a stablecoin it could trust.

Well, USD Coin (developed by Coinbase and Circle), as
Coinbase chief Brian Armstrong has reminded us all, is regulated.

Also, unlike Bitfinex at this juncture, Coinbase and Circle
could get their hands on the funds to issue enough collateralised USDC to
replace USDT and do the market a big favour.

Bitfinex is still trading at a substantial premium to the
price fiat exchanges, at around $300: on Coinbase BTC is priced at $5,734 while
on Bitfinex BTC sells for $6,053.

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