Guess who controls over half a billion Tethers across 3 exchanges—over 73% of USDT currently in circulation.

Guess who controls over half a billion Tethers across 3 exchanges—over 73% of USDT currently in circulation.

December 8, 2017 1 By Ray

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This is going to sound crazy. But the wallets don’t lie, and I’ll break it all down below (as if summoning hundreds of millions of dollars worth of fake money out of thin air to spend on real crypto-currency wasn’t crazy-sounding enough). I know this is long, but it’s worth reading if you have the time. TL;DR at the bottom.

First, I need to outline which addresses are which. All the following addresses were at one time, or are currently on Tether’s “Rich List.” And as we’ll get to below, belong to Bitfinex:

Tether Printer: 3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL
Tether Treasury: 3BbDtxBSjgfTRxaBUgR2JACWRukLKtZdiQ
Bitfinex-A: 1KYiKJEfdJtap9QX2v9BXJMpz2SfU4pgZw
unknown/Bitfinex-B: 1AA6iP6hrZfYiacfzb3VS5JoyKeZZBEYRW
Bittrex: 1DUb2YYbQA1jjaNYzVXLZ7ZioEhLXtbUru
Poloniex-A: 1Po1oWkD2LmodfkBYiAktwh76vkF93LKnh
Poloniex-B: 1Co1dhYDeF76DQyEyj4B5JdXF9J7TtfWWE

As some of you know, I’ve been investigating the web of transactions and addresses from OmnExplorer for the last several days/weeks. It has become more interesting the deeper I dig: Tether, through Bitfinex (their own partner, arguably owned by the same company) is sending hundreds of millions of USDT to Bittrex and Poloniex accounts. This would be normal if it weren’t for the fact that all these accounts appear to be under control of Tether & Bitfinex directly.

From Tether to Bitfinex to Bittrex

I discovered this when I realized Bitfinex doesn’t have any USDT trading volume, nor is USDT offered for any trading pairs on Bitfinex, despite Bitfinex being the only Associate of Tether listed in its legal terms. “So what, Pepto?” Well this is weird for several reasons:

  1. Bitfinex is listed as the only partner of Tether in Tether’s legal terms. You’d think the only exchangepartnered with Tether, and indemnified in its legal terms, would be offering USDT in its trading pairs, no? Why isn’t USDT offered on Bitfinex? After all, they are heavy users of it.
  2. Bitfinex-A has been the recipient of hundreds of millions of USDT, directly from the Tether Printer and Treasury.
  3. Bitfinex-A has spent the majority (hundreds of millions in ~half-million to million increments) of its USDT by sending it to an unknown address which exclusively sends USDT to Bittrex.
  4. Bitfinex-A and Bittrex are currently top 3 on Tether’s “Rich List.” They currently hold ~386million USDT across both addresses.

Think about these points. The only one who can be in control of this unknown address is Bitfinex. Here’s why: 1)Bitfinex does not offer or trade USDT. Tell me what random soul out there is privately selling hundreds of millions of USDT worth of goods or services directly to Bitfinex, only to send their USDT revenue to Bittrex? Who in their right mind would sell anything in exchange for Tether? 2) It’s not Bittrex, because they would have received it from the Treasury if they had directly bought it from Tether for use in their trading pairs, the only place besides an exchange where you can get it. But besides offering it as a trading pair, what exchange would ever directly trade hard cash for a digital token whose terms of service explicitly outline its worthlessness?

It is because of these points that we can safely deduce that this unknown address is owned by Bitfinex. So we’re going to label this unknown address “Bitfinex-B” for future reference. Next. If Bitfinex-B is sending USDT exclusivelyto the Bittrex address on Tether’s “Rich List” immediately after receiving USDT from Bitfinex-A, who is the owner of the Bittrex address?

Do we need to ask why Bittrex would ever exchange cash, goods or services with Bitfinex for USDT again? It’s pretty clear at this point that the “Rich List” Bittrex address belongs to Bitfinex as well. Alright, so in case we’re lost, so far, the flow of USDT looks like this:

Tether Printer >> Tether Treasury >> Bitfinex-A >> Bitfinex-B >> Bittrex

From Poloniex to Bitfinex to Bittrex

But wait, there’s more. Bitfinex-B also occasionally receives several hundred thousand USDT from one of the “Rich List” Poloniex addresses (Poloniex-A). Poloniex-A also sends tens of millions of USDT to the second Poloniex “Rich List” address, (Poloniex-B) and visa/versa.

Poloniex-A >> Bitfinex-B + Poloniex-B
Poloniex-B >> Poloniex-A

Now, if Bitfinex-B is receiving occasional USDT from Poloniex-A (as we outlined above), then who is sending USDT from the Poloniex-A? Let’s look at a few major hints:

  1. Poloniex-A has sent a tiny amount of USDT directly to the Tether Printer once before.
  2. What reason would Poloniex-A have to send USDT to Bitfinex-B unless it were a withdrawal from a Poloniex account? Remember, Bitfinex doesn’t buy USDT, they distribute and spend it as Tether Associates.
  3. Whenever Poloniex-A sends USDT to Bitfinex-B, the same amount is then sent from Bitfinex-B to the Bittrex “Rich List” address. Yes, the same Bittrex account we determined belongs to Bitfinex.

Here’s the updated flow:
Poloniex-A >> Bitfinex-B >> Bittrex
Poloniex-A >> Poloniex-B
Poloniex-B >> Poloniex-A

They’re all intertwined.

From Poloniex to Bitfinex to Bittrex to Second Poloniex

Considering these things, Bitfinex is the likely owner of not only Bitfinex-B and Bittrex, but also Poloniex-A. If it’s true that Bitfinex owns Poloniex-A and the Bittrex address, then Bitfinex may own both Poloniex addresses on the “Rich List” (Poloniex-A + Poloniex-B) Why? Consider these points:

  1. Poloniex-A sent a total of ~180 million USDT to Poloniex-B up to November 28th 2017. It’s just sitting there, with the occasional return spend back to Poloniex-A (the one Bitfinex owns).
  2. Poloniex-B had also received an insignificant amount of USDT (~100 test transaction) directly from the Bitfinex-owned Bittrex address.
  3. Poloniex-A has sent hundreds of thousands of USDT to Bitfinex-B.

Here’s the once-more updated flow:
Poloniex-A >> Bitfinex-B >> Bittrex >> Poloniex-B >> Poloniex-A
Poloniex-A >> Poloniex-B

So we have Poloniex-B, an address receiving 10’s of millions of USDT from: Poloniex-A & Bittrex – both owned by Bitfinex. And only ever sending USDT back to Poloniex-A (owned by Bitfinex). Who do you think owns Poloniex-B?

Unfortunately, the history only goes back 20 pages on OmnExplorer. So I can’t confirm which address that initial ~180million USDT came from after it left the Treasury, before arriving in Poloniex-A.

Tether & Bitfinex Afraid of Their Own Coin?

So, here’s what’s insane to me: 1. Bitfinex holds USDT on their exchange, yet doesn’t offer USDT in any of their trading pairs. That’s insane to me because Bitfinex is the only Associate of Tether in Tether’s legal terms. If they do offer USDT, they’re calling it USD which is sketchy as hell. 2. Instead, they pass their massive USDT balance on to exchanges that do offer USDT in their trading pairs. Namely, Bittrex and Poloniex. Clearly, someone is trading USDT on these exchanges, as CoinMarketCap displays.

In summing up the USDT flow:

Printer >> Treasury >> Bitfinex-A >> Bitfinex-B >> Bittrex >> Poloniex-B >> Poloniex-A
Poloniex-A >> USDT Printer + Bitfinex-B + Poloniex-B

This rabbit hole is a lot deeper than the big toe I’ve stuck into it with this post, which only covers 4 addresses on Tether’s “Rich List.” Would you be willing to bet that most, if not all, addresses on the Rich List belong to Tether & Bitfinex? I won’t say that’s the case (how could I?), but I will say that it wouldn’t surprise me.

Currently, the Tether “Rich List” accounts for ~644,000,000 (~76%) of the ~844,000,000 total USDT in circulation. There is 100,000,000 USDT that the Rich List doesn’t display, probably the rest of the Tether being used in “regular-person” trading accounts in Huobi, OKEx, etc. Even if Tether & Bitfinex do not own all the addresses on the Rich List, if we only consider the ones we’ve already covered that they do likely own, that’s still ~623,000,000 USDT (~74%) of the total ~844,000,000.

Tether & Bitfinex currently control at least 70% of USDT’s circulation, and it’s all on cryptocurrency exchanges.Taking this one step further, looking at the daily volume of USDT ($1.7 billion at the time of this writing), and adding up the total 24hr BTC/USDT volume across the major exchanges (Bittrex, Poloniex, Huobi, OKEx, Binance, HitBTC), which totals $1.12 billion at the time of this writing, we can see that the majority (~66%) of daily USDT trading volume is going into BTC.

Think about who owns most of that USDT, as we already outlined above.

At BTC’s current 24 hour trading volume of over $18billion, USDT makes up about 6% of BTC’s trading volume.

What about Bitfinex? They are, after all, the number one highest volume trader of BTC/USD. My only hope is that they aren’t trading BTC/USDT under “BTC/USD” (I realize it is difficult to both deposit and withdraw at Bitfinex with USD). If they are, there is a ton of data that would currently not be able to display properly. We’d see USDT’s daily trading volume increase by over $2.3billion. Combined with the current daily USDT volume of $1.7billion, we’d see its volume reach to over $4billion, the majority of which is on Bitfinex.

Consequently, we would also see the daily BTC/USDT volume increase to over $3billion, which would make up about 17% of BTC’s daily trading volume.

I don’t quite have the confidence yet to directly say what this means. Only that the facts I’ve laid out above do concern me. Thanks for reading, please feel free to contribute, debate, prove me wrong, etc. As most things I investigate, I’ll be happy and relieved to be wrong about any and all of the above. 🙂

TL;DR – Tether (Tether Limited / Tether Holdings Limited), in partnership with Bitfinex (BFXNA Inc. / iFinex Inc.) is the sole user and trader of USDT across at least 3 major crypto exchanges (Bitfinex, Bittrex, Poloniex), controlling over 73% of USDT in circulation–623,000,000 of the total 844,000,000. While ~66% of USDT daily trade volume is on the BTC/USDT pair, USDT also happens to make up between 6% & 17% or more of daily BTC trading volume.

To boil it down: USDT was created by Tether, for Tether.

I welcome debate, and any further information that may prove me wrong. Yes, I want to be wrong on this. I hope I am wrong on this because it is insane to me that the company printing typing hundreds of millions of dollars worth of fake money out of thin air is the same company that controls the majority of that fake money, where it primarily exists on cryptocurrency exchanges.

This kind of power was previously only wielded by the Federal Reserve! Print money >> send to exchange >> buy assets >> rinse, repeat. Anyone familiar with the 2007-2009 financial crisis is well-aware of the bail-outs. Trillions were printed out of thin air to prop up the US economy. Am I saying BTC is being propped up by Tether? I haven’t gotten that far yet. Is 6% to 17%+ of daily BTC trading volume enough to move its price? I don’t know. And I emphasize this:

This post wasn’t about BTC being–or not being–propped up by Tether. It’s purely about fake money being used to buy legitimate valuable cryptocurrencies, which can be turned into USD or used to purchase real goods and services.

EDIT 1: Bonus for anyone wanting to continue researching. This address (16tg2RJuEPtZooy18Wxn2me2RhUdC94N7r) is under the label, “Quarantined” on the Tether “Rich List.” It currently holds ~30million Tether, all received from this address (31okFF1rUu8jjPEVuajycTRBp82Nteo4Mv) towards the end of November. I’m interested because this “31okFF” address is one of the only other addresses receiving Tether from the Treasury.

EDIT 2: Incidentally, the Treasury hasn’t sent Tether since November 19th. Is there a new Treasury? All we have to do to figure that out is go to the Printing address. Sure enough, it has been sending hundreds of millions of Tether to this new address (1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz) since November 26th. This is the only other address the printer has sent USDT to besides the original Treasury. The patterns yet remain the same. After hitting the Treasury, USDT flows straight to Bitfinex-A.

EDIT 3: From u/imaginary_username [+3] (thank you for your efforts)

A few things to add:

  1. Tether “Treasury” moved after the “hack” to 1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz.
  2. 1MZAayfFJ9Kki2csoYjFVRKHFFSkdoMLtX is the “recycling” address that flows Poloniex USDT back to Bitfinex. 1MZAayfFJ9Kki2csoYjFVRKHFFSkdoMLtX doesn’t just recycle Polo USDT, it also recycles Bittrex.
  3. 15KXxPi4zAY5pLD8yvzZALXyCYhcqmuKuv is another address that flows exclusively from finex to Bittrex.
  4. 1DdrGZDomf5tSWbxPYwZyDP6Zx5vFapPCx is “Bitfinex flush” that exclusively bounces a shitload of USDT back and forth between itself and Bitfinex-A.
  5. 1J1dCYzS5EerUuJCJ6iJYVPytCMVLXrgM9 is an interesting one. It’s been very active in shuttling Tethers from finex/Bittrex to Polo almost exclusively during the last few Tether prints and just recently did another one, but it’s building up its stash again. Watch its movement and it can be rewarding.