Bitfinex Covered $850 Million Loss with Tether’s Reserves: NYAG

The New York Attorney General’s office on Thursday alleged that Bitfinex lost $850 million and subsequently used funds from Tether’s cash reserves to cover up the losses.

According to the press release, Attorney General Letitia James obtained a court order to probe iFinex Inc., the parent company of both Bitfinex and Tether, and the investigation concluded that the associated companies are in violation of New York state laws.

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds,” James stated.

“New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

TL:DR the Tether/Bitfinex news: Bitfinex have borrowed ~700mil from Tether Bitfinex pay a 'fair' interest rate on this loan 60million shares in Bitfinex were pledged as collateral If CryptoCapital release the USD, no problem If Bitfinex trades profitably, no problem

— Alistair Milne (@alistairmilne) April 25, 2019

Tether is a dollar-pegged stablecoin issuer which maintains a currency chest of USD, equalling the number of USDT in circulation.

The New York authorities were already skeptic about the business of both Bitfinex and Tether. Last November the firms were subpoenaed and ordered not to continue business in the state.

The recent fillings revealed that the crypto Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term never informed its investors about the losses it incurred and accessed Tether’s currency reserves to project a healthy business. So far, Bitfinex has used at least $700 million from Tether, according to the AG’s filing.

Bitfinex's Response

Countering the allegation of the New York Attorney General, Bitfinex has issued an official statement denying all the claims.

“The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million ‘loss’ at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded,” the exchange noted.

The exchange also ensured that it is a financially strong company and will cooperate with the authorities in any investigation.

“We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers,” it added.