Bitwise Crypto Index Committee Meeting
Meeting called in accordance with Index Rule “III.A.ii.c” due to New York Attorney General claims toward Tether and Bitfinex.
Date: April 25, 2019
Time: 4:30 – 5:30 P.M. PT
Reason for Meeting: Meeting called in accordance with Index Rule “III.A.ii.b” due to NY AG claims toward Tether and Bitfinex.
In Attendance: Matt Hougan (Chair), Hunter Horsley (Member), Hong Kim (Observer)
Item 1: Response To NY AG Allegation With Regards To Tether And Bitfinexing of EOS Tokens on the Ethereum Blockchain
Explanation: The New York Attorney General has retained a court order against iFinex Inc., operator of the Bitfinex virtual asset trading platform, and Tether Limited, issuer of the “tether” virtual currency, and their related entities, based on allegations of fraudulent behavior while attempting to hide the “apparent loss of $850 million dollars” of co-mingled client and corporate funds.
The Bitwise Crypto Index Methodology Rule III.a.i.c governing the eligibility of cryptoasset exchanges to contribute prices to Bitwise indexes lists the following requirement:
Is in compliance with local regulations and not subject to extraordinary regulatory or legal action.
Explainer: This requirement exists to limit exchanges to those that are positive actors in the community, and to limit the potential for interruptions in service or unusual pricing due to government or regulatory enforcement actions.
A vote was taken to determine if, in light of the New York Attorney General’s court order, Bitfinex should be removed from contributing prices to the indexes.
Conclusion: 2/2 vote yes to remove. Bitfinex is removed from contributing prices to the Bitwise indexes, effective immediately.
Discussion: The removal of this exchange doesn’t substantially harm price discovery or ability to access liquidity, thus being cautious comes at no detriment to the indexes and funds.