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August 13, 2018 | A Major Cryptocurrency Remains Shrouded In Mystery

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

If you’ve never heard of tether, it’s a cryptocurrency with daily trading volume of about $3 billion that is second only to bitcoin’s $5 billion. Tether was the subject of a prominently displayed article in Monday’s Wall Street Journal headlined “Mystery Shadows a Digital Currency”.   Of course, “mysterious” is about the last thing we should want said about money given us in exchange for such goods and services as we might provide to others. Tether’s sales hook is that it is 100% backed by U.S. dollars, or so the company’s founders say. The Wall Street Journal, while not necessarily smelling a rat, implies that everyone who transacts in tether would be better off not having to take the company’s word for it. Trouble is, Tether dismissed the firm it had hired to perform an audit, Friedman LLP, before Friedman issued a final report. To further obfuscate things, no one is saying what the auditors might have learned concerning three banks that supposedly hold dollar backing for the $2.5 billion in tether coins now in circulation.

Coincidentally, your editor just finished reading a book titled The Ten Greatest Conmen, by Roger Cook and Jim Tate.  The ten swindlers profiled in the book had one thing in common: a rare gift for convincing otherwise intelligent men and women that there was plenty of money or collateral behind whatever it was they were pushing. To read the book is to be shocked at how some very smart people, often well placed in government, were completely taken in. We should therefore be grateful to the Journal for keeping our eyes open as cryptocurrencies seek to gain a foothold in our daily lives. Money that anyone, not just central banks, can simply create will always deserve our diligence and a modicum of skepticism. Cryptocurrency aficionados should take note: If Tether does not come squeaky clean, it could be a significant setback for digital money. For now, though, we can only trust — but verify! — a statement made by Tether’s chief compliance officer, Leonardo Real, to the Journal, “There’s nothing to hide here. It’s not just three managers cranking out money randomly in a dark basement somewhere.” Good enough, at least for the time being. But we await solid proof of this while at the same time wishing Tether well, since any exchange medium that can prove its worth and integrity in the marketplace deserves a try.

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August 13th, 2018

Posted In: Rick's Picks

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