Cryptocurrency exchange Bitfinex and stablecoin issuer Tether entered into a settlement with the New York Attorney General’s Office (NYAG). Under the terms of the agreement, Bitfinex and Tether must pay a $ 18.5 million fine. In addition, companies are prohibited from continuing to operate in New York City.
The proceedings have been dragging on since April 2019, when NYAG accused Bitfinex of using funds from its sister company to cover up a shortage of $ 850 million frozen in the accounts of the processing service Crypto Capital.
“Bitfinex and Tether irresponsibly and illegally harbored large financial losses in order to maintain their scheme and protect their profits,” said Attorney Laetitia James. “Tether’s claims that its virtual currency was fully backed by US dollars at all stages were false.”
According to The Block, Bitfinex and Tether have admitted no wrongdoing. Jason Weinstein, a lawyer for both companies, said the prosecutorial investigation was “limited only by the nature and timing of certain information.”
“Contrary to speculation on the web, there has been no evidence of the issuance of unsecured USDT at any point in time or of manipulation of cryptocurrency prices,” he said.
NYAG says that following confirmation of reserves at Deltec’s Bahamian bank, the very next day, Tether began withdrawing funds from the account and moved hundreds of millions of dollars to Bitfinex accounts.
“Thus, as of November 2, 2018, that is, one day after the last ‘verification’, USDT was again not backed by US dollars in the Tether bank account at a 1: 1 ratio,” writes NYAG.
As part of the settlement, Tether voluntarily agreed to provide the NYAG and the general public with quarterly reports of USDT collateral. NYAG, in turn, has acknowledged that Bitfinex has paid off Tether’s debt. Bitfinex and Tether said they had to hand over 2.5 million pages of documents to NYAG to close the case.
In the absence of more serious sanctions or accusations, the UNUS SED LEO (LEO) token, issued by Bitfinex in May 2019 to raise $ 1 billion and fill the missing reserves, climbed to new all-time highs above $ 2 and is one of the few assets growing today amid a decline in cryptocurrency. market.
Stay in touch! Subscribe to Cryptocurrency.Tech in Telegram.
Discuss current news and events at the Forum