As you all know, it was reported today that on December 6th 2017, Bitfinex and Tether were served subpoenas from the CFTC.
U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether
U.S. regulators are scrutinizing one of the world's largest cryptocurrency exchanges as questions mount over a digital…
A lot of people complain that I ‘never post solutions’, regarding Tether. Well, buckle up. Because I’m about to post a solution for exchanges that have Tether, and what they should do, immediately.
Based on the Tether rich list, exchanges are holding the vast majority of Tethers in single wallets, technically, based on the blockchain, the exchanges ‘own’ these Tethers on behalf of their customers.
- Disable trading of Tether immediately to prevent adverse market conditions and close all orders based on Tether.
- Acquire a legitimate bank account for your exchange, in your exchanges name. No shell company games, no shenanigans.
In theory, you should already have a bank account.
- Immediately demand that Tether convert all Tethers you hold on behalf of your customers, to US Dollars, and to transfer them to your bona fide, corporate owned, bank account.
- Once Tether transfers all funds to your account, replace all users USDT, with USD and re-enable trading for them, but now they have USD to trade with.
- Start using real banking with USD, instead of Tether. You’re already supposed to be KYC/AML compliant anyway. There’s no advantage to using Tether, only disadvantage.
I’d give Tether between 48 hours and 72 hours to transfer the funds. If everything is there as they claim it is, this should be very quick and painless.
If Tether refuses to transfer the money or claims ‘problems’ and other nonsense, I’d suggest filing a lawsuit against them ASAP.
NOTE: Be suspicious if there is massive selling of cryptos over this, this should have a neutral market reaction, if there’s large amount of selling it could be a sign that Tethers were being backed by cryptos and they are liquidating crypto-currency to come up with the USD. Tether redeeming all of the Tethers for real money in fact should be excellent news.
As a Bitcoin exchange you should be looking out for your customers. This is one way to do that.
There’s your solution to getting Tethered.
And any other Tether exchange…
It’s up to you.