CFTC Subpoenas Bitfinex over its Murky Relationship with Tether ‎

Bitfinex, the world’s biggest bitcoin exchange by trading ‎volume, was issued a subpoena from the U.S. financial regulators ‎in regards to the digital token that its backers has long had a murky ‎relationship with, Tether. ‎

The CFTC wants Bitfinex to provide more information about Tethers, ‎which are tokens backed by US dollar deposits, with each ‎token always worth one dollar, as the two entities share the ‎same CEO, Jan Ludovicus van der Velde, Bloomberg reported.‎

According to the report, “The U.S. Commodity Futures Trading ‎Commission sent subpoenas last week to virtual-currency venue ‎Bitfinex and Tether.”‎

Specifically, Bloomberg states the subpoena is looking for documents ‎related to the company’s purported cash deposits, particularly ‎after the bitcoin price crashed in the last few weeks.‎

Tether’s records showed it had $443 million in ‎bank accounts as of Sept. 15. However, the British Virgin Islands-based firm didn’t ‎identify the banks where that money was held, and a report from auditor Friedman LLP said that it didn’t investigate the reliability of ‎such records. The accounting firm only confirmed that bank deposits were held is in the ‎name of a trustee, but Friedman said it could not vouch that Tether ‎had any enforceable agreement with that trustee.‎

As such, the value of Tether only rests on the claim ‎by its issuer, which if turned to be false, it means the client’s coins ‎could have been bid up by tokens that aren’t worth anything. ‎

Adding to their banking woes, Tether lost access to Wells Fargo as its correspondent bank, in April, through which it was able to receive deposits from U.S. customers.

Earlier in November, more than $30 million worth of USDT was stolen from the provider of dollar-backed digital tokens. Given its size, the theft has sparked confusion and frustration among market traders and observers since it was announced, and now entices attention from the U.S. regulators.