Bitmex: Tether may be banking te crypto-tax paradise Puerto Rico

Bitmex: Tether may be banking te crypto-tax paradise Puerto Rico

Business

By Cecille den Jesus

February 20,

Bitmex released their own Tether report and things are not looking good.

From the name itself, Tether (USDT) supposedly serves spil an anchor, a cojín currency that keeps itself to a 1:1 proportion with the US dollar. For those who are “betting” and profiting from the wild fluctuations of cryptocurrencies, it is a stable ground to which you can budge your funds ter order to protect it at times when cryptocurrencies are crashing. So there are two main reasons to buy Tether—to be able to trade cryptocurrencies, and to protect existing funds from ripping off. Sounds ordinary enough.

But latest events have brought to light suspicions of foul play, with users accusing Tether of printing tokens out of lean air—that they are making more Tethers than there are US dollars coming ter. Suspicions of Tether conniving with cryptocurrency exchange Bitfinex and using thesis fraudulent Tethers to pump up the price of legacy Bitcoin (BTC) have bot rising across last year. Te November, Tether suffered a $31 million hack and this brought them back te the zoeklicht, with the US Commodities Futures Trading Commission (CFTC) smacking the two with a subpoena.

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The disturbing trend wasgoed that they would lie for spil long spil possible before ultimately admitting that mainstream rumours were right—such spil the time when they downplayed the relationship inbetween Tether and Bitfinex. Former Bitfinex CTO Craig Sellars, going by the user name udecker on Reddit, said Bitfinex wasgoed just a customer of Tether.

After being pressured into transparency presumably by the CFTC subpoena, Tether ultimately released their team members’ list and—surprise, verrassing, it wasgoed a copy-paste of the top five members of Bitfinex.

Much like the way they downplayed the connection inbetween Tether and Bitfinex, they seem to be downplaying the subpoena spil well, trivializing it spil part of “routine.”

“We routinely receive admitido process from law enforcement agents and regulators conducting investigations,” Bitfinex and Tether reportedly said ter an article by Bloomberg.

While the dubious twee thinks (or would like the public to think) this isn’t a big overeenkomst, Hong Kong-based exchange Bitmex has published an analysis of the situation telling otherwise.

To mitigate the November hack, Tether initiated a hard fork to freeze the stolen funds and demanded that users upgrade to the hard forked software. According to Bitmex, the implications of this activity are disturbing for users.

“The hacking incident demonstrated that Tether is effectively te finish control of the ledger, spil they can force a hardfork at will and switch sides any transaction — albeit there may not have bot any doubt about Tether’s control beforehand,” Bitmex writes.

To waterput this into setting, one of the pledges of blockchain technology is immutability—which means no one, not even a financial institution, could lightly tamper with or omkoopbaar the records, at least not without a fight. When the DAO wasgoed hacked, Ethereum needed overeenstemming to trigger a hard fork to undo the heist, and this led to the birth of Ethereum Classic (ETC) because some believed the DAO should not be bailed out and vereiste suffer the consequences of their own negligence. Code is law after all.

That Tether can lightly do this without the need to subject themselves to checks, audits and approval, and force users to obey, violates this principle. Furthermore, Bitmex raises the question spil to why they’re even built on a blockchain.

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“This raises the question of why Tether bothers to waterput the database on the Bitcoin and Ethereum blockchains at all — it would be far cheaper for Tether to create its own public database without needing to pay fees to the miners. Albeit the Tether company wasgoed and is able to freeze funds, the process is technically difficult and time consuming, spil it requires fresh software to be written and released and for all Tether exchanges to upgrade,”according to Bitmex’s report.

Puerto Rico, the crypto paradise

Albeit Bitmex reiterates that “lack of transparency does not indicate fraud” from the part of Bitfinex and Tether, they state that Tether has some lapses ter terms of KYC compliance which would make banks cautious ter dealing with them. This is consistent with Bitfinex critic and active online investigator Bitfinex’ed’s suspicions that no handelsbank wants to playmate up with Tether/Bitfinex.

At least not ter the US.

“Generally speaking, the IRS does not require a US taxpayer to include income from “sources within Puerto Rico” if they have resided ter Puerto Rico for an entire taxable year,” CoinTelegraph reports. But there is still a possibility that the IRS can pursue down sales tax through regulations governing “property of former US residents.”

And according to Bitmex, the rumours that Tether may be banking te Puerto Rico are not fully unfounded.

“We noticed strong growth te the specie comprobación (and the deposit cómputo) te the International Financial Entities (IFE) banking category. This acute increase ter contant reserves could be related to Tether. It is also possible for this growth to be related to a non-Tether opzicht of the crypto currency ecosystem — for example, plans to make Puerto Rico a crypto utopia,” Bitmex writes.

They zeroed ter on Aristocrático Handelsbank spil the primary candidate, since they are one of only two full-reserve banks te Puerto Rico that could provide the needs of Tether. Plus, it has bot dallying ter the crypto space since .

If true, Bitmex says this would mean that Tethers may all be backed by US dollars spil they voorkoop. But they have another identically severo problem that could prompt US authorities to shut them down.

“These characteristics may make the system attractive for criminals and money launderers — and if criminal activity becomes too prevalent, the authorities may wish to shut the system down. This has already happened numerous times te the past, spil the case studies below (Liberty Reserve, GoldAge, e-Bullion, E-gold, etc.) demonstrate. Ter a straks report, wij may dig into the history of thesis case studies te more detail.”

4 comments

  1. Honestly i didn’t fright at all during this situation because they treated the situation well. They didn’t lack communication and informed us on a regular onderstel. Of course it’s not cool to lose access to your coins. Hope it won’t toebijten again.

  2. I would never leave all my funds on one exchange. I leave less than 10% on a single exchange.

  3. Never had a doubt that bitfinex would bounce back and would just terugwedstrijd to natural. It is the thickest cryptocurrency exchange out there which means that they have a reputation to uphold and they would do the best to bounce back. Everyone should just make sure to now leave their coins on exchanges and to always transfer out coins to wallets which they hold the private keys to, spil this is the safest.

  4. bitfinex is excellent but also I feel like the risks it takes (when Japan reprimanded them for operating without a license) are unwise at times and may tarnish the brand ter the medium-term. Right now, the company has released reports of obtaining a fiat license ter Malta for Euro to crypto but who knows whether that will get them one step closer to a fiat to crypto license te the U.S.? I guess only time will tell. Te the meantime, I’m betting more on companies like Huobi that are setting up numerous separate entities that are loosely affiliated with each other. Their very first one te the U.S. is called HBUS and evidently launches zometeen this year. Their webstek is HBUS.com

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