Twenty four hours after news of the theft of $31 million worth of Tether tokens have become public, Bitcoin and its fellow cryptocurrencies have regained the losses they felt in the immediate aftermath of the event. The collective value of most cryptocurrencies was initially weighed down by news of the Tether break-in, but by Wednesday, Bitcoin and company have all recovered and were trading above pre-event levels. Bitcoin proponents have pointed to this as a demonstration of Bitcoin’s irrepressible nature.
Tether itself on the other hand has been coming under increasing suspicion and scrutiny in the wake of the break-in. Disturbing facts have been coming to light about the Hong Kong incorporated company – stretching back months before the latest incident.
Skepticism had already been growing around Tether since April, after the the company announced that it will not be able to process bank wires as its USD accounts have been blocked (without any reasons given) by Wells Fargo. In a bizarre turn of events Tether reacted by filing a lawsuit against Wells Fargo in a California court, only to abruptly and inexplicably retract the suit less than a week later. The incident fueled concern about whether Tether’s digital tokens were actually backed by fiat currencies in reality.
Skeptics have also raised questions about Tether’s relationship with Bitfinex, a shady online exchange that has itself been hacked in 2016, under murky circumstances. Bitfinex has (perhaps unsurprisingly) been named as the partner in Tether’s abortive lawsuit against Wells Fargo. Both Tether and Bitfinex appear to have gone to great lengths to conceal who they are and what jurisdiction they are operating out of.
More recently, incensed members of the crypto-community have pointed out that one does not have dig deep to uncover incriminating evidence on Tether. Simply by looking at the “legal” section on Tether’s website, members of the public began to notice some rather unsettling facts. One of those things is the fact that according to its “legal” section Tether is not obligated to let customers exchange their digital tokens for dollars.
The company goes further to state: “Tethers are not money and are not monetary instruments. There is no contractual right or other right or legal claim against us to redeem or exchange your tethers for money. We do not guarantee any right of redemption or exchange of tethers by us for money.”
The statements above do not require further commentary as to why members of the crypto-community as well as why members of the general public might find them to be highly disturbing.
An email requesting clarification, sent by Bloomberg to the support address on Tether’s website wasn’t immediately replied to as of Wednesday afternoon.