The cryptocurrency market faced a minor setback today as news surfaced that the New York attorney general’s office is investigating major cryptocurrency exchange Bitfinex for alleged fraud.
The report alleges that Bitfinex has spent the past few months attempting to cover up major losses incurred when a Panamanian banking partner disappeared with $850 million worth of Tether (USDT) tokens. The stablecoin Tether is a sister company of Bitfinex (both are managed by the iFinex brand) and has previously been implicated in accusations of market manipulation in relation to Bitfinex operations. While these accusations remain unfounded, Tether has long been questioned due to its inability to provide reliable audits regarding its asset holdings.
Bitfinex has responded to the fresh allegations by stating that the alleged ‘missing’ funds are simply tied up in accounts for security reasons and customers have nothing to worry about. An official press release from Bitfinex states that “The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions.” However, leaked conversations from late last year relating to the missing funds seem to indicate that Bitfinex was in fact struggling to back customer funds at a time when the cryptocurrency market experienced a severe drop in value.
Cause for Concern?
Despite a minor dip in the cryptocurrency market as a result of the report, many analysts suggest that investors have little to worry about. In the long run, it would seem the crypto market is still as strong as ever.
While the overall cryptocurrency market has suffered a $10 billion loss following the controversy, Bitcoin is only down a total of two percent today and is trading at $5,260. Considering that its price was below $4,000 not that long ago, this minor correction is not exactly a huge cause for concern.
In addition, the Bitcoin network’s confirmed transaction count is higher on average than it’s been in almost a year and a half – a sure sign that there is massive interest in the market. This fact, coupled with its recent ‘golden cross‘ move above the 200-day moving average in early April, are both very strong bullish signs.
Emerging markets and technologies like cryptocurrency are prone to exaggerated controversy and wildly over-inflated media storms that tend to spook investors in the short-term. However, long-term price valuation and maturity are grounded in strong fundamentals and rational sentiment regarding an assets genuine worth. The majority of analysis indicates that the cryptocurrency market remains within a strong upward trend pattern, with a break above $6,000 for BTC likely in the near future.