Tether’s Executives are Deeply Conflicted

Let’s start at the top (or more accurately at the figurehead): Jean Louis Van Der Velde, the CEO of both Bitfinex and Tether is also the executive director for a Hong Kong based Venture Capital Firm. (Archive)

Giancarlo Devasini, the Chief Financial Officer for both Bitfinex and Tether, is a shareholder and director in BlueBit Capital with Silvano di Stephano the Chief Investment Officer for Tether. BlueBit Capital is a cryptocurrency investment fund.

https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=oBdhD/5_PLUS_L7RIRhat6MJLng== (Archive)

It is unclear why Tether was suing to stop the disclosure of the identity of their CIO when we already know. I guess perhaps they do not want additional attention of BlueBit. It’s especially striking considering that Silvano was on the loan agreement between Bitfinex and Tether.

https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=0pbbMaSfXK5hx68VPp_PLUS_fWQ==
https://twitter.com/ExkrementKoin/status/1409981893907472387

Paolo Ardoino, the Chief Technology Officer for both Bitfinex and Tether, was a director for Delchain. Delchain is the cryptocurrency focused offshoot of Deltec Bank and Trust, where Tether banks. Importantly Delchain recently launched Fulgur Alpha, (archive) a cryptocurrency hedge fund that they onboarded to Bitfinex.

Claudia Lagorio, the Chief Operating Officer for Bitfinex and Tether, is married to Paolo Ardoino, a director for Delchain.

The only Tether C level executive who I have yet to find a serious conflict of interest for is Leonardo Real, the Chief Compliance Officer.

Ask yourself when was the last time you saw Tether executives or spokespeople pushed about these conflicts of interest, I have seen very little.

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Episode 26 — Cryptocurrency Lending is Too Good to Believe — Crypto Critics’ Corner

Cryptocurrency Lending is Too Good to Believe Crypto Critics' Corner

Today Bennett Tomlin and Cas Piancey explore the incredible interest rates offered by centralized cryptocurrency lenders, how they likely make their money, and whether or not any of them are "risk-free."

In this episode Cas and I discuss the problems with cryptocurrency lending companies including BlockFi, Celsius, and Nexo. They are marketed as risk-free while actually you take on significant counterparty risk. 

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Tether and Bitfinex Introduction

Tether and Bitfinex Introduction Bennett's Articles

Tether and Bitfinex are two of the most important companies in the cryptocurrency ecosystem. Tether is the largest stablecoin, and the primary driver of volume and liquidity. Bitfinex used to be the largest cryptocurrency exchange, and still is a frequently used exchange. Tether and Bitfinex have an incredibly problematic past and are quite possibly the largest corporate fraud in history. Read more: https://bennettftomlin.com/2021/08/08/tether-and-bitfinex-introduction/

Tether and Bitfinex are two of the most important companies in the cryptocurrency ecosystem. Tether is the largest stablecoin, and the primary driver of volume and liquidity. Bitfinex used to be the largest cryptocurrency exchange, and still is a frequently used exchange. Tether and Bitfinex have an incredibly problematic past and are quite possibly the largest corporate fraud in history.

Continue reading “Tether and Bitfinex Introduction”

$ALCX: Alchemix Cannot Turn Lead to Gold

There is a brand new DeFi protocol that lets you immediately take out a loan for half your collateral and the protocol will automatically pay back your loan. Financial magic, involving transmuting one coin, into another, while depositing one in a pool, magically you can get a loan and have no risk of liquidations (not really but that’s what people are claiming [1, 2, 3, 4, 5, 6, and the coup de grace their website (archive)]). I think this protocol is flawed. You can find the whitepaper here. (Archive) (My copy)

Continue reading “$ALCX: Alchemix Cannot Turn Lead to Gold”

A Conversation about the Future of Finance

This story was inspired by this tweet.

“Bro, you gotta get in on this. I think I have discovered the future of finance.”

Continue reading “A Conversation about the Future of Finance”

What is Crypto Capital Corp?

Crypto Capital Corp is a licensed (in Panama (archive) [for one of the corporations]), unlicensed (My copy) (just about everywhere else) money transmitter and payment processor. They partnered with a variety of cryptocurrency companies including: Kraken, Bitfinex, Quadriga, Bitmex, Coinapault, and more. They are implicated in wire fraud, bank fraud, embezzlement, and hundreds of millions of dollars worth of money laundering for the Colombian cartels.

Continue reading “What is Crypto Capital Corp?”

Raphael Nicolle and the Founding of Bitfinex

Raphael Nicolle is the founder of Bitfinex. Before that he had an interesting path.

By day a helpdesk technician, during his free time Raphael became active under the account ‘unclescrooge‘ on BitcoinTalk. From this account he makes some interesting posts, including occasional climate change denialism, saying he would invest in illegal businesses, and at least one joke about underage prostitution to make bitcoin. First he got into pyramid schemes, schemes that were not legally registered, and then he got really into pyramid schemes, and then he started defending a pyramid scheme scammer (repeatedly), and then he lost all the bitcoins he gave that scammer.

Shortly after this, Raphael decides he will start his own OTC desk and his own lending program. People will lend him Bitcoin and he will guarantee them a 2% return per week. To make this money he said he would be performing arbitrage, which he described as ‘buy low and sell high’. (Astute readers will note that this at best an extraordinarily simplified definition of what arbitrage is.) This program appears to not have taken off, perhaps due to questions from other forum members about his advocacy for pyramid schemes in the past. The text of the post was later deleted.

After this Bitfinex launched! (Though Raphy could be found still trying to do what look like OTC trades.) Bitfinex was a brand new ‘Meta-Exchange’ that would allow people to trade at either Mt. Gox or at Bitstamp through the BitFinex interface. They also had their own exchange that was based on stolen Bitcoinica code. Bitcoinica was an exchange that was rife with security issues that had recently shut down. The unique feature for Bitfinex that made it attractive (besides the ability to aggregate liquidity across multiple exchanges) was the fact that they had margin and lending integrated into the platform. However, the fact that it was built on stolen code with a multitude of issues in the early months. However, eventually they started to even out. However, there were still some interesting posts including at one point Raphael even made sure to point out that his exchange was a bucket shop. (This was a fact that Vitalik Buterin had warned about in Bitcoin Magazine.)

Raphael gradually took a less and less public role in Bitfinex until (according to his LinkedIn) left his role as CTO the same month that the Bitfinex hot wallet was hacked. He is now interested in anti-aging and looking for an executive producer (he should get in touch with the chairman of Deltec).

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My Appearance on The Blockchain Debate podcast with Larry Cermak and Patrick McKenzie

You can find it here.

I had a ton of fun recording this podcast, however, due to time constraints I was not able to get to all my notes on whether or not Tether acts in good faith. I would like to summarize a few of the things I was not able to get to here:

  1. Bitfinex has used the bank accounts of friends and family of Bitfinex in order to service withdrawals.
  2. The firm who provided Tether’s last attestation is no longer operational, and Freeh, one of the lawyer behind it UPDATE: is no longer a lawyer is no longer practicing law, but may still be licensed.
  3. Tether advertised no KYC swaps between Bitcoin and Tether.
  4. Tether held tens of millions of dollars in the bank account of their General Counsel.
  5. The founder of Bitfinex was promoting ponzis right up until he announced Bitfinex.
  6. The founder of Bitfinex once described his own exchange as a bucket shop.

There are many more, but I just wanted to give you a taste of some of the stuff we ran out of time to get to.

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Predictions and Outcomes

At one point I tried to learn about a token called Kimchi. That token no longer has any volume or value to speak of.

I decided to summarize some facts about the failed crypto entrepreneur Jacob Kostecki. Today, the class action lawsuit against him has entered default judgement.

I wrote about a deeply exploitive scam called The Billion Coins. Unfortunately, that coin is still active and is still taking advantage of people. They have tried to rebrand to make themselves look more official, but are still the same group of scum.

I once wrote about a worthless token called slidebits. Now the creator himself removed the blockchain from his app.

I wrote an article presenting a bearish case for a token when I was applying to a crypto hedge fund. That token has a market cap 1/10 of it’s all time high. Though I must admit, it has not seemed to be affected by any of the issues I pointed out. Sometimes things just break your way.

I wrote an article taking an in-depth look at the Basis Protocol. In that article I suggested both that part of the system could be a security. Basis shut down to avoid securities scrutiny.

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