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Tether Bitfinex Reconciles with New York Attorney General

Smartphones display the market value of tether via crypto apps.

Guillaume Peien | SOPA Images | LightRocket | Getty Images

Cryptocurrency company Tether and Bitfinex Agreed Payed a $ 18.5 million fine with the Attorney General’s Office in New York Closely monitored legal disputes..

The state’s Supreme Law enforcement officer was investigating the company for allegations of moving hundreds of millions of dollars to cover the apparent loss of $ 850 million in mixed customer and corporate funding. Tether and Bitfinex (a popular digital currency exchange) are owned by the same company, Iffinex.

Tether and Bitfinex need to suspend trading with New Yorkers and submit quarterly transparency reports, the Attorney General’s office said. This is a major development in the crypto industry and will end the long-running legal battle that began in April 2019.

What is a tether?

Tether is the company behind the famous “stable coin” of the same name. The token is intended to be backed by a one-to-one in US dollars, and the idea is that it is much more stable than most digital coins whose prices fluctuate significantly.

Many crypto investors buy using tether Bitcoin And other virtual tokens. However, there was concern about whether there was sufficient cash reserve to support all the tether tokens in circulation by Tether.Critics also said that tether tokens Used to manipulate Bitcoin prices, A claim that Tether repeatedly denied.

The office of New York Attorney General Letitia James says he discovered that Tether may not have the reserve to back up the cryptocurrency dollar peg. Since mid-2017, the company has lost access to banks, misleading customers about liquidity issues.

In a 2019 filing, the Attorney General’s office stated that Bitfinex had handed $ 850 million to a Panama entity called Crypto Capital without disclosing it to investors. Since then, Bitfinex and Tether executives are allegedly engaged in a series of transactions that open Tether’s cash reserves to Bitfinex.

“Bitfinex and Tether have recklessly and illegally concealed huge financial losses in order to continue the plan and protect profits,” James said in a statement Tuesday.

“Tether’s claim that cryptocurrencies are always fully backed by the US dollar was a lie,” she added.

“These companies were run by unlicensed and unregulated individuals and groups that traded in the darkest parts of the financial system, masking the real risks faced by investors.”

Tether does not admit cheating

Tether and Bitfinex refused to admit Tuesday’s misconduct, but said they “share the Attorney General’s goal of increasing transparency.”

“Contrary to online speculation, two and a half years later, there was no discovery that Tether issued Tether unsubstantiated or to manipulate crypto prices,” the two companies said. statement On the Tether website.

Spokespersons from both companies could not be contacted immediately when CNBC asked for further comment.

Earlier this month, Bitfinex said it had repaid the remaining balance of its $ 550 million loan to Tether.

Cryptocurrency investors are closely watching New York fraud investigations. New York fraud investigation recently Bitcoin soaring..

According to CoinMarketCap data, about 34.8 billion tether tokens are currently in circulation. Increased from 2 billion three years ago.. Cryptocurrency has a market capitalization of $ 34.6 billion.

Bitcoin fell 10% on Tuesday and traded at a price of $ 48,713.The most valuable digital coin in the world Already tumbling Prior to the announcement by the Attorney General of New York.

Tether Bitfinex Reconciles with New York Attorney General

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