Another Cryptocurrency Exchange is Hacked!

To subscribe to this newsletter, click here. To tweet out about the newsletter,click here.


Tether (USDT) Account Snapshot Statement

What's the Story?

  • Tether's law firm, Freeh, Sporkin & Sullivan LLP, reviewed Tether's financials
  • The review isn't an audit nor did it follow GAAP principles
  • The report concluded Tether had enough USD to exceed the balance of issued Tether

Why Does This Matter?

This report is nothing more than a PR stunt. Tether paid a law firm to issue a statement stating Tether is solvent. Why not hire an accounting firm? How do we know Tether didn't temporarily transfer funds from Bitfinex to Tether to cover a gap in funding (not to say that there is or isn't a gap). An audit doesn't just confirm if the appropriate balances are in the right accounts, but also how that money got there.  The law firm also made no review of the legal situation of Tether. Tether is primarily used to avoid KYC/AML regulations. An exchange would use it so they don't have to comply with laws related to handling fiat deposits and withdrawals. The whole situation is strange. I don't know anything about the law firm who dealt with the review, but I can't imagine they signed off on a fraudulent bank account. Also, who keeps $2B in one bank account. For all the skepticism around Tether, I do believe that this report is accurate (even if my tone doesn't come off that way). I do think Tether is engaging in some illegal activity such as money laundering. Why else would its auditor quit? Why hasn't Tether hired a new auditor? In time, I expect answers to these questions, but for now, we wait.


Top bitcoin exchange says over $30 million in cryptocurrencies stolen

What's the Story?

  • Bithumb, a leading Korean cryptocurrency exchange, was hacked
  • $30MM was stolen from the exchange
  • Bithumb announced they would cover the loss

Why Does This Matter?

Another exchange has been hacked. Last week, Coinrail, another Korean exchange, was also hacked. Cryptocurrency exchanges are prime targets for hackers due to the irreversible nature of cryptocurrency transactions. Once, the cryptocurrency is moved off an exchange; it's nearly impossible to recover the funds. While the markets may react to a hack such as Bithumb, these types of hacks should have little impact on prices. There are many options for trading Bitcoin and other large cryptocurrencies. There should be a minimal impact on liquidity if traders temporarily lose access to one exchange. Even if traders completely lose faith in an exchange that is hacked, traders will move their business to an exchange that hasn't been compromised. It still baffles me how exchanges don't keep the majority of their funds in cold-storage and why users don't keep the majority of their funds in cold-storage. If you invest in cryptocurrency buy a Trezor or Ledger, it'll be one of the best investments you make.