Factom $FCT, a respected company with recent funding from The Gates Foundation, on march 9th 2015 announced a partnership with Tether (archive) and on the 11th March 2015 a partnership with Coinapult (archive)!
Factom Harmony Teaser from Factom on Vimeoplayer.vimeo.com
Given the serious nature of fraudulent claims levied towards Tether / Bitfinex and the dubious banking relationship exposed of Coinapult LOCK(TM), DASH, and Cryptocapital, who both have ongoing partnerships with Factom, legitimate questions surrounding the authenticity, accountability and validity of the Factom service have been raised.
What is Factom’s role in these partnerships?
Let’s assume Tether create fresh USDT, Factom can confirm, verify and vouch USDT are only exchanged and issued to Bitfinex ‘customers’ in exchange for BTC.
The risk here being the issuing party Tether/Bitfinex, could be directly buying BTC with USDT then selling those BTC for real USD on Coinbase. Why is this a problem? In such a scenario where Tether purchases BTC with newly issued USDT then sells these on Coinbase for real USD, Tether / Bitfinex can theoretically extract (clean-out) all the USD coming into Coinbase, bankrupting them in the process!
Open Questions To Factom About TETHER:
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Can Factom confirm the continued partnership with Tether and if the partnership ended can you release a public announcement informing of the reasons for the breakdown of the partnership.
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Can Factom verify that Tether has the amount of USD under management in the ratio 1–1 with issued USDT.
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Can Factom verify that Tether and Bitfinex are NOT directly issuing USDT, themselves buying BTC then selling BTC on Coinbase (using proxy accounts), thereby slowly bankrupting Coinbase of USD?
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Can Factom confirm that Bitfinex/Tether are holding the correct amount of BTC against customer claims and are not running a fractional reserve exchange holding less BTC than the total claims against them.
Open Questions To Factom About COINAPULT:
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Can Factom confirm the continued partnership with Coinapult and if the partnership ended can you release a public announcement informing of the reasons for the breakup.
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Can you confirm the LOCK(TM) assets held under management by Coinapult/CryptoCapital are in fact issued as Tethers and held as BTC.
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Can you confirm how many BTC are held under management by Coinapult.
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Can you vouch that the BTC held by Coinapult are 1–1 with the outstanding claims against them and that Coinapult/Cryptocapital are not acting as a fractional reserve.
There are huge risks for the entire crypto economy should Tether/Bitfinex be issuing USDT and exchanging via BTC, with USD on CoinBase (thereby bankrupting Coinbase — the most relied upon exchange for Fiat I/O.
There are huge risks for hundreds of thousands of people unwittingly holding USDT in various wallet services and exchanges via Coinapult Lock(TM) feature should USDT deviate from the 1–1 USD peg on the unregulated exchanges.
Given Factom have openly partnered with Tether and Coinapult and are respected members of the crypto community currently auditing these entities assets and claims, it is with great responsibility and immediacy that answers to these open questions be provided for the sanity of everyone currently exposed.