It should come as no surprise that Tether’s structure has now garnered the limelight of the NY AG. Previously, Bloomberg reported that the US CFTC sent subpoenas to both parties, a Tether hack back in November 2011, Tether dissolved its relationship with its auditor, a UT study revealed Tether being used to manipulate BTC prices, and so forth. Despite the negative news for the industry, the underlying community remains strong and resilient to such occurrences.
We are now witnessing a “run-on-the-exchange”, a unique test case for Bitcoin Hodlers to prove that the sum of its parts can push through greed’s hold on using crypto for quick, scammy gains. As I type this out, a reported $185 million in BTC and ETH has been removed from Bitfinex’s cold storage wallets – about 20.0 percent of their total total balance. While additional losses (in terms of crypto pricing and faith in the industry) are expected over the short run, I remain confident that the industry players will find ways to effectively manage the risk of these illicit activities.
The history of our community demonstrates powerful forces pushing forward, working collectively on unique solutions that bring us closer to the goal of blockchain entrepreneurs – to create trust and accountability in the digital world. After Mt. Gox, crypto security providers become more popular, a renewed focus on security culminated in the popularity of cold storage solutions, multi-sig authority, and updated private key protocol. Large companies like IBM and Fidelity took the opportunity to release their own technology solutions for crypto custody.
We have also observed the shakeout of ICOs in favor of a more measured, standardized approach to fundraising on the back of blockchain-enhanced infrastructure. ICO deal flow has experienced significant losses over 2018 and the first half of 2019, favored by a variety of STO projects that use blockchain solutions to go to market more efficiently. Scam artists, like those responsible for Centra Tech, are being brought to justice – clearing the way for focus to turn to real projects.
However, progress has all proven to take time and work in volatile cycles. The direct impact on the crypto community has yet to be seen; however, prior fraudulent activity and hacks have lead to negative BTC performance over the subsequent 30 days after an event. The average max drawdown over this period, net of S&P 500 returns for the events listed below, has been about 25% – indicating that we may be in for a bumpy second quarter.
However, after all of these prior events: Bitcoin mining hash rates continue to climb year after year and adoption marches on via new, exciting platforms that demonstrate the potential of crypto technology.