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Tether strikes at WSJ over ‘stale allegations’ of faked documents for bank accounts

March 6, 2023 Coin Telegraph

Allegations

Tether has hit back at a Wall Street Journal report detailing alleged shady dealings by it and Bitfinex to open bank accounts.

The company behind stablecoin Tether (USDT) has rebuffed a report by The Wall Street Journal claiming it had ties to entities that faked documents and used shell companies to maintain access to the banking system.

On March 3, the WSJ reported on leaked documents and emails purportedly revealing that entities tied to Tether and its sister cryptocurrency exchange Bitfinex faked sales invoices and transactions and hid behind third parties in order to open bank accounts they otherwise may not have been able to open.

In a March 3 statement, Tether called the findings of the report “stale allegations from long ago” and “wholly inaccurate and misleading,” adding:

“Bitfinex and Tether have world-class compliance programs and adhere to applicable Anti-Money Laundering, Know Your Customer, and Counter-Terrorist Financing legal requirements.”

The firm went on to say that it was a “proud” partner with law enforcement and “routinely and voluntarily” assists authorities in the United States and abroad.

Tether and Bitfinex chief technology officer Paolo Ardoino tweeted on March 3 that the report had “misinformation and inaccuracies” and insinuated that the WSJ reporters were clowns.

I'm at the PlanB anniversary in #lugano
So much energy and people excited to talk about #Bitcoin
While I was on on stage I heard some clown honks, pretty sure was WSJ.
As always ton of misinformation and inaccuracies. Poor guys, must be difficult be them but need better media.
— Paolo Ardoino (@paoloardoino) March 3, 2023

Cointelegraph contacted Tether and Binfinex for comment on the report and their statement but did not receive a response by the time of publication.

WSJ report claims Tether and Bitfinex obscured itself

The WSJ article outlines — through its reported review of leaked emails and documents — Tether and Bitfinex’s apparent dealings to stay connected to banks and other financial institutions that, if cut off from, would be “an existential threat” to their business, according to a lawsuit filed by the pair against Wells Fargo bank.

One of the leaked emails suggests the firm’s China-based intermediaries were attempting to “circumvent the banking system by providing fake sales invoices and contracts for each deposit and withdrawal.”

*Screenshot of headline from Wall Street Journal. Source: Wall Street Journal*

There were also accusations in the report that Tether and Bitfinex used various means to skirt controls that would have restricted them from financial institutions, and had links to a firm that allegedly laundered money for a United States-designated terrorist organization, among others.

Meanwhile, a person familiar with the matter told the WSJ that Tether has been under investigation by the Department of Justice in a probe headed by the U.S. Attorney’s Office for the Southern District of New York. The nature of the investigation could not be determined.

Tether has faced multiple allegations of wrongdoing over the past few months and recently had to downplay a separate WSJ report in early February that claimed four men controlled approximately 86% of the firm since 2018.

It similarly had to combat what it called “FUD” (fear, uncertainty, and doubt) from a WSJ report last December concerning its secured loans and subsequently pledged to stop lending funds from its reserves.

Composable Finance CEO denies legal violations as CTO steps down

February 20, 2023 Coin Telegraph

Accusations

The CTO stepped down from the DeFi-focused infrastructure firm on Feb. 20, but not without some allegations aimed at his former company and its CEO.

The CEO of Composable Finance has vigorously refuted allegations of legal improprieties at his decentralized finance (DeFi) infrastructure platform, which was being aired by the firm's former CTO Karel Kubat.

In a Feb. 20 Twitter post, Composable Finance's now-former CTO Karel Kubat announced he had stepped down from the firm. He also leveled a number of accusations aimed at his former company and its CEO.

In Kubat’s post, the CTO said that he is resigning because the firm has not provided financial statements to him or the community and because he has no overview of the company’s financial health.

He however said he suspects CEO Omar Zaki, who has been legally barred from raising money for companies, was involved in the raising of Series A funds for the company in violation of a cease-and-desist mandate from the U.S. Securities and Exchange Commission.

Kubat said he also suspects Zaki’s role in the alleged rug-pull project, Bribe, was “much greater than he publicly stated.”

Responding to Kubat’s resignation, Zaki took to Twitter Spaces for an AMA (Ask Me Anything) on Feb. 20, in which he vigorously denied all of the accusations. He claimed that all of the company’s actions to his knowledge were done in full accordance with the law.

1/ We’re sorry to announce that Composable Finance has parted ways with our former CTO.

While this naturally prompts questions and concerns, our team is committed to addressing these questions and alleviating any concerns.
— Composable Finance (@ComposableFin) February 20, 2023

In response to claims of a lack of financial transparency at the company, Zaki stated that the company is private and cannot publicly release financial information.

However, “we remain super confident that we have sufficient resources, personnel, and the tech to actually execute upon our strategies […] there is nothing here that causes me concern or should cause the public concern," he said.

Zaki also denied violating any orders from the SEC, stating that the Series A fundraiser was done completely offshore and was compliant with laws in the countries where it took place. Zaki stated that the company retained legal counsel to ensure that no laws were broken, as he explained:

“Those allegations are incorrect, the series A was designed as an offshore sale of utility tokens and we had outside council advising on the offering […] I had made very clear that all offerings of composable were conducted with sufficient legal council”

As for the claim that Composable was involved with the Bribe project, Zaki stated flatly “we had no part in the Bribe project.”

Composable Finance is the developer of a cross-chain bridging and messaging protocol. In Feb. of 2022, it raised over $100 million through a parachain auction on Polka Dot. Ten days after the fundraise, noted blockchain sleuth ZachXBT successfully doxxed the company’s CEO, known as “0xbrainjar,” revealing that the CEO is Omar Zaki.

In an April 1, 2019 settlement, the SEC accused Zaki of “repeatedly [misleading] investors in the Fund about assets under management, fund performance, and fund management,” during his role as an executive for Warp Finance and Force DAO. As part of the settlement, Zaki was barred from raising money for investors in the U.S.

However, the SEC action was a civil cease-and-desist order, and Zaki is understood to have not been convicted of violating any criminal laws.

ZachXBT also accused Zaki of being involved with Bribe, an alleged rug-pull scam, in the past.

Allegations