Bitcoin Falls Following Report Of Bitfinex, Tether Subpoena
Bitcoin and peers plunged Tuesday on revelations that the U.S. Commodity Futures Trading Commission subpoenaed Bitfinex, a cryptocurrency exchange, and Tether, issuer of a widely-used coin allegedly backed in dollars, in early December.
The entities, which share a CEO, came under scrutiny after Tether failed to demonstrate evidence of its holdings or audit its accounts, according to Bloomberg.
Why It’s Important
The regulatory probe calls to question the validity of the Tether and Bitfinex enterprises and reinforces skepticism prompted by Wells Fargo’s recent disaffiliation as a correspondent bank.
At the same time, it weighs on the potential of bitcoin, whose past value pops were partly driven by the trading of tether for bitcoin at Bitfinex.
The investigation also seems to justify Street concerns about the validity of cryptocurrencies and exchanges, which are largely unpoliced. The late-2017 action by the CFTC may herald a new era of regulation.
Bitcoin dipped below $10,000 on Tuesday's report, while the Bitcoin Investment Trust (OTC:GBTC) fell 4.6 percent, Bitcoin Cash dropped 5.2 percent, and bitcoin futures fell 12.7 percent. The sub-$1 tether coin saw great volatility.
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