September 19, 2021

Tether and Bitfinex to pay $ 18.5 million in fine

Cryptocurrency exchange Bitfinex and stablecoin issuer Tether entered into a settlement of claims with the General New York Attorney'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 are irresponsible andwere illegally harboring large financial losses 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 did not recognizeviolations. 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 net, no evidence of the issuance of unsecured USDT at any point in time or the manipulation of cryptocurrency prices has been identified,” 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, 2018years, 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 voluntarilyagreed to provide quarterly reports on USDT collateral to NYAG and the general public. 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 orcharges, 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.