Author’s Note: This was inspired by this old thread of mine.
Our world is full of happenings that seem to the untrained eye to be worrisome coincidences, but in reality they can easily be explained away.
Consider for example that both Stuart Hoegner (General Counsel for Bitfinex and Tether) and Brock Pierce (Founder of Tether) worked for Bitcoin Decentral a short-lived incubator in Canada. The honest truth is that the blockchain industry was small back then and there were only so many combinations of ways people could work together in an industry that small. Trying to make that into something more is deceptive and wrong. You can see the list yourself at the link I sent, this is where anyone who was anyone in crypto was choosing to associate themselves.
It makes total sense that the stablecoin founded by Brock Pierce would go to the lawyer that Brock Pierce had worked with. Why would that be shady? I mean sure they are not technically auditors but they can sign a letter better than any bank in the Bahamas. But speaking more seriously, these are the same lawyers who were associated with this casino. That’s just another coincidence though.
So yeah that same Sunlot from before. Pierce and Betts who worked together on this ended up founding the bank that would bank Tether when they were cutoff from almost every other option. To put this in a different light though it makes perfect sense. Crypto people are going to be more comfortable banking crypto people than most banks would be. They have a better understanding of the true risk profile.
So this one can be observed pretty easily here. But again from the perspective of Bitfinex this was just good business sense. Why disclose their ownership if it was likely to invite undue attention and perhaps even make it harder to maintain their always tenuous banking relations. It was the clear choice to announce it as a partnership instead.
So I think the reason that this hack is very rarely discussed outside of the Tether Truther circles is that they were able to force a hard fork of Omni which allowed them to freeze these funds and any others. Since the money was not actually lose it is easy for people to not care about. However, it is still quite odd that someone was able to get into the treasury like that.
So as we just discussed Tether can now freeze any Omni Tethers that they want (I am almost positive that they can on Ethereum too but it has been a while since I read their smart contract so don’t hold me to that) and they are supposed to track these frozen Tethers on their transparency page here. They should be listed under Quarantined Tethers on the Omni part. Now the problem is that there are more frozen Tethers than are listed here. Consider for example 1, 2, 3, 4, and 5. Now I am no accountant but I know that those numbers add up to more than Tether claims are quarantined. Weird coincidence.
So in order to understand this one you need the context of the second Bitfinex hack, where afterwards to help regain trust they promised a full financial and security audit of Bitfinex. They hired a security consultant who allegedly gave them the report, Bitfinex thought this firm could do a financial audit as well, they could not, and the security “audit” was always referred to as a report from here on out. The financial audit obviously never came. I mean they couldn’t even get an audit for Tether which was supposed to just be 1 dollar per token. This was many tokens, banks across a huge number of jurisdictions, plus they had just issued the BFX token and the RRT token further complicating the job. In hindsight it was a thing that never should have been promised.
So the audit for Tether was going to prove that they always had the money they claimed they did. The audit for EOS was supposed to come out and prove that they did not trade their own token during the sale. To explain, during the year long ICO of EOS wherein it traded on several exchanges there were accusations that the block.one team was selling tokens on exchanges and using the proceeds to buy more tokens which inflated their $4bn sale. They promised an audit to prove that this did not happen. As of writing it has not occurred.
I saved this one for last because for me it is the hardest one to wrap my head around. Raphael Nicolle was the founder of Bitfinex and he left the very same month that their hot wallet was drained. This hack was relatively forgotten because they covered the losses, but it was always odd to me that was the month that Raphael officially separated from Bitfinex. Complicating this picture is that Raphael claims on his Linkedin that he continued to do some programming for Bitfinex. This means he was still connected to Bitfinex, but in a much more easily minimized role. The other amusing wrinkle is that Raphael is a Ruby on Rails developer, which is important to remember because Bitfinex was based on the leaked Bitcoinica exchange code which was a Ruby on Rails site coded by an ambitious 16 year old.
So yeah our world is weird and there are so many crazy coincidences.