• Sat, 25 May 2019, 01:04 PM
  • All times are UTC
  • Edition:
Link copied

NY Attorney General accuses Bitfinex and Tether of $850M cover-up

Myzikk International

Fri, 26 Apr 2019, 07:29 am UTC

The New York Attorney General’s office has alleged that cryptocurrency exchange Bitfinex unlawfully engaged with stablecoin operator Tether to “cover-up” an $850 million loss.

In a press release dated April 25, NYAG Letitia James said that she has obtained a court order against iFinex, the operator of the Bitfinex, and Tether, the issuer of the “tether” (USDT), in connection with activities that may have defrauded New York investors.

“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,” said Attorney General James.

According to the papers filed with the Manhattan Supreme Court, Bitfinex handed over $850 million dollars of co-mingled client and corporate funds to a Panamanian entity called “Crypto Capital Corp.” without any written contract or assurance.

It further states that Bitfinex not only never disclosed this loss to investors but also engaged in “a series of conflicted corporate transactions” with Tether, whereby Bitfinex gave itself access to up to $900 million of Tether’s cash reserves to “fill the gap.” According to the filings, Bitfinex has already taken at least $700 million from Tether’s reserves.

“Those transactions – which also have not been disclosed to investors – treat Tether’s cash reserves as Bitfinex’s corporate slush fund, and are being used to hide Bitfinex’s massive, undisclosed losses and inability to handle customer withdrawals,” the release said.

“The Office’s filings further detail how the companies obfuscated the extent and timing of these corporate transactions during the Office’s investigation.”

The court order requires the operators of the companies to immediately cease further dissipation of the U.S. dollar assets which back “tether” tokens. It also prohibits these companies from tampering or deleting potentially relevant documents and communications.

“The court order bars the operators of Bitfinex from further draining the cash reserves of Tether, or taking personal distributions or dividends from the reserves,” it added.

Bitfinex Responds

In its response, Bitfinex said that the NYAG’s court filings were written in “bad faith and are riddled with false assertions.” It claimed that the ‘purported $850 million “loss”’ is not lost but have been “seized and safeguarded.”

“Both Bitfinex and Tether are committed to fighting this gross overreach by the New York Attorney General’s office against companies that are good corporate citizens and strong supporters of law enforcement. Bitfinex and Tether will vigorously challenge this, and any and all other actions, by the New York Attorney General’s office,” it added.

Bitcoin price, which touched a five-month high of $5,650 earlier this week, lost steam and briefly broke below the $5,000 mark to hit $4,963 on Thursday (Coinbase). However, it managed to partly recover its losses and closed above 21-EMA at $5,134. BTC/USD is currently trading in the green at $5,180 at the time of writing.

<Copyright © TokenPost. All Rights Reserved. >

The commenting service is available only after having logged in.
  • Bitcoin (BTC) $8,074.12 (+0.92%)
  • Ethereum (ETH) $255.64 (+1.74%)
  • XRP (XRP) $0.390500 (+0.56%)
  • Bitcoin Cash (BCH) $410.37 (-0.94%)
  • Litecoin (LTC) $103.05 (+4.86%)
  • Bitcoin (BTC) $8,074.12 (+0.92%)
May 24, 2019 (Friday)
Crypto Technicals: ETH/USD retraces above 1H 200-SMA, 'Hammer' on daily charts signals further gains
German engineering giant Bosch trials Ethereum blockchain
Crypto Technicals: BTG/USD grinds higher along 21-EMA, breakout at 61.8% Fib (25.74) will accentuate gains
Bank of Russia to review proposal on gold-backed cryptocurrency
Blockchain software firm Unstoppable Domains raises $4M from Draper Associates, Boost VC
Crypto Technicals: LTC/USD bounces off 21-EMA support, next bull target $109
Robinhood Crypto is now in New York
Facebook to launch its cryptocurrency 'GlobalCoin' in Q1 2020: Report
California resident sued for alleged $26M crypto Ponzi scheme
AT&T teams up with BitPay to become the first telecom to accept cryptocurrency payments
Rep. Swalwell accepting bitcoin donations in bid for US presidency
Grayscale receives FINRA approval to open Ethereum Trust to individual investors
Indian telco Airtel selects IBM for blockchain-based pan India anti-spam call solution: Report
Binance CEO CZ seeks compensation for reputational damage from Sequoia
Overstock.com’s blockchain subsidiary signs MOU with Lusaka city to develop land governance platform
Toyota, University of Tokyo, TRENDE to start testing blockchain-based electricity trading solution
Russia's NSD to roll out security token blockchain in June
May 23, 2019 (Thursday)
Crypto Technicals: IOT/USD holds 21-EMA support, retrace till 0.3185 (200-DMA) likely on break below
Coinstar extends bitcoin buying service to 21 US states
Crypto Technicals: BTC/USD bounces off session lows with 'Hammer' formation, bias neutral
Subscribe to the TokenPost newsletter!
Don't show me this again today.
Back to top
Copyright ⓒ TokenPost. All Rights Reserved.