Wash Trading or Defrauding Users in Tether (USDT) May Not Trigger Extradition to the US

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Tether, the company behind the USDT stable coin, continues to be the most infamous cryptocurrency firm, ever. Over the past two years, the company has been accused of numerous shady deals, with the latest one being the withdrawal of a large sum of money to cover up BitFinex losses.

In a tweet by Loomdart, the cryptocurrency trader believes there are some reasons why Tether continues to take part in shady transactions. The tweets saying:

 “The reason that most wash trading exchanges use USDT for volume spoofing and not USD is that wash trading against a token is probably not going to get you extradited to the US, but wash trading against USD probably will.”

According to Loomdart, the fact that cryptocurrency exchanges make use of USDT and not the real US Dollars makes it highly unlikely that the United States would request extradition of Tether officials. This “immunity” of sorts and the fact that they execute their operations away from US soils allow them to evade justice by striking deals that put user funds at risk.

Read: Tether (USDT) Losing 30% Of Its Market Cap A Blow, BitConnect Tokens?

Tether’s Long History of Scandalous Deals

A research paper by professors at the University of Texas last year revealed that Tether and BitFinex played a role in the Bull Run of late 2017 that saw the Bitcoin price surge to an all-time high of $20,000 per coin.

The paper accused Tether of using its USDT tokens to artificially inflate the price of Bitcoin at various intervals in 2017, especially when the prices are down. Researchers noted that Bitcoin (BTC) did expand on retracement days after Tether Limited minted USDT. By doing that the company kept the {pump” going, shoring prices and creating a false image of a healthy market weeks after demand from China had been cut off.

Besides, before the mega rally, US bank Wells Fargo suspended its services for BitFinex and Tether blocking roughly $180 million of the two companies’ funds. Additionally, Wells Fargo also restricted a few banks from doing business with Tether and BitFinex. Since then, they have been using Crypto Capital, a Panama-based payment processing firm.

While BitFinex claims to have severed its relationship with Tether last year, investigations carried out shows that the companies have been involved with each other for a long time as they share the same executives.

The “Paradise Papers” leak published by the International Consortium of Investigative Journalists ties the two companies together as far as 2014. The report shows that an offshore law firm Appleby assisted the CSO and CFO of BitFinex, Philip Potter, and Giancarlo Devasini in setting up Tether in the British Virgin Islands five years ago.

Also Read: Bitcoin (BTC) Hits $5,200 As Tether News Propagates, Traders Flee BitFinex

In November 2017, Tether made an announcement revealing that there was a security breach that led to them losing $31 million in USDT tokens. From the official blog post, hackers did remove the funds from the Tether Treasury wallet, and they couldn’t redeem any coins in possession of the hackers.

The latest scandal comes as the New York State Attorney General reveals that it is suing Tether and BitFinex for taking part in fraudulent activities. From what is publically available, the NYOAG reveal that BitFinex lost roughly $851 million in the hands of Crypto Capital and Tether covered for the loss from its reserve funds.

Lack of Proper Audit

Even so, a conspicuous dent against Tether is the fact that its funds haven’t undergone an adequate inspection from a third party firm. Even if the company maintains that it has the reserve to cover for the USDT tokens in the market, the lack of proper audit makes that point invalid.

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