Questions Arise
Questions about Tether and Bitfinex, one of the world’s largest crypto-exchanges that also shares the same management team, have dogged the virtual currency world since last year, when Bitfinex lost banking relationships yet continued to operate. To date, $2.8 billion Tethers have been issued, according to the company’s website. The U.S. Commodity Futures Trading Commission subpoenaed both firms in December, seeking proof that Tether is backed by a reserve of U.S. dollars, as it claims. British Virgin Islands-based Bitfinex and Tether haven’t been accused of wrongdoing.
Gemini is registered with the state of New York as a trust company, meaning it must put the needs of its customers before the needs of the firm, what’s known as fiduciary duty, Winklevoss said. That’s a higher standard than applied to companies that have received BitLicense, the state’s cryptocurrency permit created by the New York Department of Financial Services, he said.
Paxos is also a regulated trust company.
“The DFS makes sure we’re doing what we say we’re doing,” Winklevoss said. “That’s usually how the trust problem is solved.”
This article was provided by Bloomberg News.