The Attorney General of New York State dropped a bombshell this week by implicating Bitfinex’s Tether in a massive fraud. They believe Bitfinex was trying to mask the loss of $850m of customer funds that it had given to a third-party payment processor based out of Panama.
For some background, Tether is a stablecoin that was created by the cryptocurrency exchange Bitfinex as a digital representation of a dollar – the exchange was to hold physical dollars at a third party bank account to ensure that each Tether was fully backed.
For years, market participants have accused Tether of fraud since its parent company would not release audited financials. If we believe the Attorney General’s report, the most surprising revelation is that Bitfinex’s intentions were actually in the right place – and Tether was always a legitimate dollar. The crypto-exchange only started raiding the Tether funds AFTER their foreign payment processor went under.
As the DeFi (decentralized finance) movement continues to take hold, it is painfully obvious that large unregulated centralized exchanges are the crypto ecosystems weakest link.
Ultimately, the sheer irony of how the Tether situation has played out is not lost on anyone…. certainly not Ms. Morissette.
FinTech Collective part of growing lineup at inaugural Digital Asset summit - FinTech Collective's Sean Lippel will be moderating an all-star DeFi (decentralized finance) panel on May 15, 2019 which includes Josh Stein (CEO, Harbor), Stephen McKeon (Partner, Collaborative Fund), and Juthica Chou (COO, LedgerX). Read more
Isn't It Ironic
Bitfinex used Tether reserves to mask missing $850m, probe finds - While Tether may not have started out as a fraud, the New York attorney general alleges the cryptocurrency exchange operator drained popular coin's reserves to conceal missing funds. Read more
French lender Societe Generale issues $112m bond on blockchain - The 5 year covered bonds were designed by FORGE and issued on the public Ethereum blockchain with Societe Generale as the sole investor. The goal was to reduce costs and time to market, while increasing secondary transferability. Read more
Revolut promises to grow up as it seeks new investment - Revolut’s quest for world domination has had a troubled winter and now the upstart bank is considering introducing a disruptive new innovation to its business: a phone number. Read more
How developing nations use tech to reach the ‘underbanked’ - As the FT reports, technology such as artificial intelligence is being used in emerging markets to improve data collection and streamline credit decisions. Yet much of the world’s “underbanked” population rely heavily on cash, meaning that humans will remain critical for some time. Read more
Google Street View image of a house predicts car accident risk of its resident - A report published this month shows how images of houses are predictive of car accidents - analyzing Google Streetview images of houses substantially improved car accident risk prediction compared to the state-of-the-art risk model at insurance companies. Read more
A new bill would force companies to check their algorithms for bias - The Algorithmic Accountability Act is aimed at major companies with access to large amounts of information. It would apply to companies that make over $50m per year, hold information on at least 1m people or devices, or act as data brokers. Read more
Iraq’s financial inclusion drive boosted by homegrown fintech - A Baghdad-based company, International Smart Card, now helps 7m Iraqis receive welfare benefits or public sector salaries electronically. Read more
Verizon names 20 more 5G cities, starts preorders for $1,300 Galaxy S10 5G - Verizon, which has said it would deploy 5G in 30 cities in 2019, today announced 20 of those cities. Read more
Crypto-based transfers can cut remittance costs in Africa by 90% - On average, it costs 9.3% of value transferred to send the equivalent of $200 to the region - the highest anywhere in the world. With the African remittance market is expected to grow 4.2% in 2019 and 5.6% in 2020, the expectations is that crypto-based transfers will take more share of this market. Read more
Ellevest - NYC based digital investment platform has raised a $33m Series B led by Rethink Impact and PSP Growth. Read more
Halo Investing – Chicago based structured products platform has raised an $11m Series B led by Allianz Life Ventures. Read more
Perch - New York based home buying and selling platform has raised a $21m Series B led by Firstmark and other existing investors. The company also raised a $200m debt facility. Read more
Unqork - New York based A.I. platform to automate customer workflows for financial institutions has raised a $22m Series A led by Goldman Sachs. Read more
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