Bitcoin price plunges as CFTC sends subpoenas to Bitfinex, Tether

Bitcoin price plunges as CFTC sends subpoenas to Bitfinex, Tether

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According to Bloomberg, US regulator had sent subpoenas to Bitfinex and Tether, the firm behind a namesake digital token. Tether's token is quite a popular substitute for the dollar and is used worldwide for trading among exchanges. 

In brief:

The U.S. Commodity Futures Trading Commission has sent subpoenas to Bitfinex and Tether, following which the price of bitcoin dropped below USD $10,000. At the time of writing, Bitcoin price has fallen way further, down to USD 8,420 while the total marketcap of all cryptocurrencies has slipped below USD 400 billion, standing at USD 396 billion.

On Tuesday, the U.S. Commodity Futures Trading Commission had sent subpoenas to the world's largest cryptocurrency exchange Bitfinex and cryptocurrency startup Tether. Following this the price of bitcoin suffered a sharp decline, sinking below USD $10,000.

According to Bloomberg, US regulator had sent subpoenas to Bitfinex and Tether, the firm behind a namesake digital token. Tether's token is quite a popular substitute for the dollar and is used worldwide for trading among exchanges. It is claimed to be directly pegged to the value of the US dollar. However, the CFTC and critics remain skeptic about the claim made by Tether that its USD $2.3 billion in tokens are backed by USD reserves.

The company stated, "We routinely receive legal process from law enforcement agents and regulators conducting investigations. It is our policy not to comment on any such requests," reported Bloomberg.

Recently, CoinDesk reported that Tether's association with auditing firm Friedman LLC had suspended. Friedman, which is closely linked to the British Virgin Islands-based Bitfinex, had been working on an audit process with Tether.

The criticism faced by Tether, the company behind the controversial USDT token which functions as a kind of synthetic dollar, is going to further deepen with this recent news of probe.

Since there is no actual evidence for tokens are backed by USD, critics are of the view that the token isn't backed on a 1-to-1 ratio with the U.S. Moreover, it is being argued that in wake of recent market slowdown, Tether generated tokens to boost up the price of bitcoin.

The news led to sudden sharp fall in the price of bitcoin to a 13-day low of $9,900. At the time of writing, the price of Bitcoin has fallen way further to USD 8,420 according to coinmarketcap.com. The total market capitalization of all cryptocurrencies has breached the USD 400 billion, and stands at USD 396 billion.

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