Bitfinex
Media,  Tether

Bitfinex’s new tactic: Attack journalists

Bitfinex, the embattled exchange with a reputation for opaqueness, has taken on a combative approach against journalists—specifically, targeting one from a big name in crypto reporting.

Tether WatchAbout a week ago, CoinDesk’s David Floyd began focusing on the crypto soap opera that is Bitfinex and Tether. On October 19, he wrote a piece about how traders were moving their Tether tokens on to Kraken. It appears those traders were then selling their tether for U.S. dollars because the exchange rate touched a low of 85 cents. “With users apparently unable to convert their USDT into dollars in the way envisioned by Tether’s white paper, they seem to be trying to accomplish the same goal by moving tokens onto Kraken,” Floyd wrote.

On Monday, Floyd followed up with a story about how Bitfinex—the exchange run by some of the same people in control of Tether—moved 630 million tokens into Tether’s “treasury,” thus taking them out of circulation. This move coincided with tether’s price falling below $1 and there may have been an accounting reason for it. According to one argument posited around the cryptosphere, “Tether is in effect redeeming the tokens with itself, buying them at a discount on the market and transforming the U.S. dollar collateral from a liability to an asset,” wrote Floyd. “It’s worth noting, however, that the tokens have not been destroyed, as Tether said it would do with redeemed tokens in the white paper.”

Tuesday saw another piece by Floyd, this time about how $48 million in U.S. dollars versus tether (USDT) trades appeared to have occurred on Bitfinex that day according to CoinMarketCap. The only problem is that Bitfinex doesn’t make a market in USDT/USD. That data was sourced by Bitfinex’s API and Floyd said CoinMarketCap was “as confused as anyone about the meaning of the non-trading pair.” He noted, however, that CoinMarketCap claimed there was no “noticeable effect” on tether’s reported price on the data aggregator’s site.

The story was published at 1:30 p.m. Eastern Time on Tuesday. Two hours after the initial publication of the piece, Floyd edited it to include a comment by Bitfinex:

“In an earlier email, Bitfinex’s head of marketing, Kasper Rasmussen, told CoinDesk, “We do not have a direct USD/USDT pair on Bitfinex so I believe it represents deposits/withdrawals of some kind.”

He added that “USDT is only used as a transport layer on Bitfinex,” meaning that it can be withdrawn more quickly than fiat and deposited more simply on other exchanges. Dollar trading pairs on Bitfinex, he continued, refer to U.S. dollars and not tethers.

Following the publication of this article, Rasmussen emailed CoinDesk to explain that the USDT/USD pair “tracks deposits and withdrawals to the following wallet.”

He then said:

“CoinMarketCap displaying a pair does not equate to Bitfinex publicising data that doesn’t exist. CoinMarketCap track our API’s and them displaying this pair is not something which we have control over, nor is it something we have pushed for.”

Yet Bitfinex didn’t stop there. A couple of hours after Floyd included their comments, the exchange posted this sharply worded tweet:

Later that afternoon, Floyd posted on Twitter that he had been the subject to harassment, implying it was related to his coverage of Bitfinex and Tether:

https://twitter.com/davidfloyd512/status/1054841642677624832

Larry Cermak, an analyst for crypto news site The Block—which has also covered the Bitfinex/Tether saga in recent weeks—likewise said he received similar treatment from Whalepool, a site sympathetic to the exchange and stablecoin:

The next day, Floyd followed up the CoinMarketCap story to note that the site “has changed the way it uses data from the Bitfinex exchange in response to a report by CoinDesk.”

Specifically, the data aggregator “has revised to exclude its volume. This will represent it accordingly and ensure it does not have any contributions to volume going forward. You can see this on the page with ** pointing to volume exclusion,” they wrote Floyd, who posted their comments in his article.

But Floyd then added:

“However, while the Bitfinex USDT/USD pair’s volume appears to be excluded from calculations on CoinMarketCap’s tether markets page, it is unclear whether it’s been excluded from volume totals on the site’s Bitfinex page.

For one thing, the pair is not labeled with a double asterisk, denoting ‘volume excluded,’ on the Bitfinex exchange page. Further, the sum of all listed Bifinex pairs’ 24-hour volumes yielded the total volume listed at the top of the page, suggesting that the $39.5 million in USDT/USD volume had not been excluded.”

He went on to say that CoinMarketCap complained about Bitfinex’s “lack of communication.”

One hour after Floyd’s first Bitfinex/Tether story for the day, he posted another one, this time about how 500 million tether tokens were “burned” by the Tether treasury.

“Bitfinex’s cold wallet’s balance has fallen by around 100,000 bitcoin since early September, leading some to speculate that the exchange has been spending bitcoin in order to take tether off the market – perhaps to push the exchange rate back towards the $1.00 mark, or perhaps even to exit the stablecoin business entirely.

As a result of these transfers, the supply of tethers in circulation has dropped by around a quarter in a week and a half, to approximately $2 billion. Now many of these tokens, in addition to having been taken out of circulation, have been ‘burned’ or destroyed by the company.”

Floyd included a rebuttal by Bitfinex’s spokesperson, Kasper Rasmussen, who said the move wasn’t meant to keep tether’s price at $1 and that Tether wasn’t purposely pairing its supply of the token.

Nonetheless, a couple of hours after that second story was posted, Bitfinex didn’t hold back communicating their feelings about David Floyd via Twitter:

Journalists are under attack in general, sometimes with lethal or potentially lethal consequences, as we’ve seen in recent weeks. That isn’t to say some crypto “journalists” aren’t sullying the profession. A recent story by Corin Faife of The Breaker highlighted a troubling practice by some publications to take payments in exchange for positive coverage.

One of those interviewed by Faife was David Wachsman, who said, “It’s imperative that these [public relations] professionals provide real value by fostering strong relationships with reporters and communicating the intricate details of a company, project, or technology.”

Wachsman’s firm is the publicist for Bitfinex and Tether. We reached out to Wachsman for comment on Bitfinex’s tweets but have received no response as of publication (check back here when we do).

Nonetheless, it’s clear that a company criticized for not communicating intricate details of its business has made it clear it will communicate its emotional outbursts—and we’ve seen that elsewhere with other prominent Twitter users.

Bitfinex brags on its website that it has had $8.4 billion in transactions over the past 30 days. But crypto is a young industry. Larger exchanges in the conventional financial world have learned not to personally attack reporters, regardless of what the institutions may think of the Fourth Estate.

Lawrence Lewitinn, CFA is editor in chief of Modern Consensus. Disclosure: Lewitinn owns no cryptocurrencies in his portfolio.

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