NY attorney lasers Bitcoin’s key funding mechanism

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