We've logged a number of unusual events related to Coinbase and Tether over the past few days and the purpose of this article is to share some of those facts with you, the Cointimes reader, so that you can enjoy the weekend to reflect and draw your own conclusions.
Stablecoins are being thoroughly investigated by the US government .
USDT accounts locked in Coinbase
On January 5, 2022, the page that investigates fraud in the cryptocurrency market – @Bitfinexed – reported that the publicly traded exchange, Coinbase, was arbitrarily freezing user accounts.
According to an image (whose source cannot be verified), the company asked the user to withdraw their USDTs (Tether) so that the account could be reactivated.
Some response comments suggested that the freezes would be for users located in countries with regulatory bans against Tether's currency, due to the use of the word “geofenced”.
Geofenced is used when there is some kind of warning or limitation for when a device enters a certain geographic area.
Forecast of "unscheduled maintenance" in Coinbase
The same account posted a tweet on January 6th saying:
“Coinbase will close the negotiations before the 40k (dollars) range. 'Unscheduled maintenance.' The market will miraculously recover and they will come back online. In ~24 hours.”
At dawn on January 7th, around 1 am, the page made a new publication:
“Coinbase getting ready to close trades just before we lost 40k. Fingers on button for 'unscheduled maintenance'.”
And he even posted a meme representing Coinbase ready to press one of the two buttons, in a difficult decision:
- "Allowing retailers to dump on market counterfeiters during the market downturn;"
- "Prove that @Bitfinexed was right about turning off exchange."
The @CryptoWhale page – with over 400k followers – also predicted this could happen.
“(…) Now watch how all the major cryptocurrency exchanges conspire to go offline to keep prices from falling too low.
Always happen. This market is manipulated by the few at the top.”
The Downdetector website recorded 19 users reporting problems with Coinbase at 00:51am, a few minutes before posts with predictions from both @Bitfinexed and @CryptoWhale.
And approximately 12 hours later, Coinbase went into 'planned maintenance' (but no maintenance notice had been given in advance), locking down all operations.
Tether moves, the market goes up and "everything goes back to normal"
“(…) Just before we lost the 40,000, they shut down retail so they wouldn't sell, tether injects nearly a billion dollars in counterfeit money, the market recovers and Coinbase is back. I'm not a genius, these idiots are so obvious.”
Related to Whale Alert – Whale Alert (twitter bot that monitors large movements on-chain), Tether had announced that it would make a cross-chain transfer (between blockchains) of $2 billion USDT , to meet the demand of a “ third part".
A few hours later he reported that the transfer amount was reduced to $750M USDT at the request of the “third party”.
These announcements have been commonplace, intended to provide transparency about on-chain movements so that the market knows that the current supply of USDT is not changing.
Nassim Taleb also comments on the case
The investor and bestselling author who specializes in finding black swans on the market also commented on the case.
“If this is true, there is explicit manipulation taking place. (…)”
USDC loses approximately $4.0B of capitalization
One hour after the events described, the market capitalization of USDC, Coinbase's dollar-backed stable coin, dropped by $4 billion in a few minutes.
As it is a stablecoin, the loss of capitalization is linked to the amount of coins in circulation, which means that – in theory – around 4 billion dollars were withdrawn from circulation (through burning) from Coinbase's treasury, but none Token burning has been registered on-chain so far , as it normally occurs.
Confidentiality of Reports
Tether also filed a lawsuit requesting confidentiality in the presented transparency reports, finding that the companies Circle and CoinDesk share a common investor – Digital Currency Group .
They claim that there is a conflict of interest as Circle is a co-founder of the USDC currency (alongside Coinbase) and that the reports could be used by its competitor for corporate strategy purposes.
Transparency reports were regulatory mandates by the US government to ensure the legitimacy of all stablecoins.
What can we conclude?
It is very difficult to draw conclusions about what is happening, what the reasons are, the implications for the market, whether it is legitimate events, fraud or lies.
The only possible conclusion is that this is all very strange.
The sequence of events makes the whole situation even worse and the fact that this pattern has been observed in the past is also worrying.
If we can give any advice, it is that investors keep their eyes open and, if possible, do not keep very relevant amounts on the exchanges .
Receive any and all information critically and always try to verify the facts.
Whether by people who are investigating the cases, such as news portals (this includes Cointimes), as well as by exchanges and other service providers.
“Don't trust, verify” – “Don't trust, verify” and “do your own research” (DYOR).
Coinbase, Tether and USDC content; What's happening? DYOR! first appeared in Cointimes .