Bitfinex and the game of chicken
In particular, we want to assure you that the allegation that we have “lost” $850 million is categorically false. We have been advised that these amounts – whether in whole or in substantial part – are, in fact, seized and safeguarded in several jurisdictions, including Poland, Portugal, the United Kingdom, and the United States.
-- Bitfinex, April 27th 2018
Bitfinex is playing a game of chicken with the market/news, betting they can prop up USDT price using their (mostly cryptocurrency) reserves for long enough until the selling pressure blows over.The Department of Homeland Security and U.S. District Court for the District of Maryland issued a 'Seizure Warrant' for the funds associated with Mutum Sigillium's Dwolla account (a.k.a. Mt. Gox)
-- Mt. Gox, May 15th 2013
Up to the point they actually run out of reserves, things will look more or less perfectly normal. When Bitfinex'es funds run out, things will get very ugly, very fast (as there won't be anybody left to buy up USDT against overwhelming selling pressure). Like a chicken hitting a concrete block at hypersonic velocity. USDT will collapse to a price near $0 within seconds. You will not get any warning or time to sell. Any standing sell order you placed on an exchange beforehand won't execute (except for the lucky few) until you've lost all your money and sold off your USDT for fractions of a cent to the dollar.
USDT holders/Bitfinex customers are riding shotgun on that hypersonic game of chicken blindfolded, having no idea how much reserves Bitfinex has and how fast they're spending them. Rest assured, Bitfinex will not tell anybody when they're about to run out of funds. They'll claim everything is fine up to the last millisecond.
- Do not hold USDT (or any other "stablecoin", they aren't, stable)
- Do not keep funds on Bitfinex (in fact do not keep funds on any exchange if you can avoid it)
- Do not get Goxxed