NY attorney lasers Bitcoin’s key funding mechanism
- Date: 24-Feb-2021
- Source: Financial Times
- Sector:Financial Markets
- Country:Middle East
NY attorney lasers Bitcoin’s key funding mechanism
It's been a volatile and stressful week in cryptoland.
First Elon Musk, the electric boss of eccentric car company Tesla (or was it the other way round) and one of bitcoin's most high-profile supporters, tweeted on Saturday that the cryptocurrency's price "seems high“.
Then, after bitcoin hit a record high of $58,354 on Sunday, US Treasury secretary and former Fed chair Janet Yellendismissed bitcoinas an "extremely inefficient way of conducting transactions“, as she lamented its staggering energy consumption, a comment that helped bitcoin fall more than 22 per cent from its peak. At pixel time, Bitcoin was trading around $47,500.
And then on Tuesday, the New York District Attorney's office moved to suspend Bitfinex and Tether's "illegal activity“ in the state.
The connected entities will now be prohibited from servicing New Yorkers, on the basis that they deceived the market by overstating reserves and by covering up approximately $850m in losses around the globe.
The move could be a major blow to the value of bitcoin, due to the role that Tether, a dollar-tracking crypto stablecoin, plays in supporting dollar-denominated inflows into the bitcoin ecosystem.
Tether's transparency page puts its current dollar assets at $34bn. But regulators and critics have always worried about the shape and