Crypto firms Bitfinex and Tether have been ordered to stop trading in New York. After reaching a settlement with the New York Attorney General’s (NYAG’s) office. As a result, a legal dispute that had been ongoing for nearly two years ended.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going. And protect their bottom lines.” Said Attorney General James.
“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced. They were operated by unlicensed and unregulated individuals. And entities dealing in the darkest corners of the financial system.”
The NYAG’s office alleged that Bitfinex used their funds to secretly cover $850 million lost to Crypto Capital. Because of this, withdrawal problems emerged for Bitfinex’s customers in late 2018.
The company attributed the issues to Crypto Capital’s funds being seized by government authorities. Those being officials in Portugal, Poland and the U.S.
Bitfinex And Tether Agree To Pay $18.5 Million
As part of the settlement, Bitfinex and Tether have agreed to pay $18.5 million. However, the firms admitted to no wrongdoing.
“The Attorney General’s Office concluded. In essence, that we could have done better in publicly disclosing these events. Contrary to online speculation, there was no finding that Tether ever issued USDT without backing. Or to manipulate crypto prices.” Said Jason Weinstein, a partner at Steptoe & Johnson and counsel to Bitfinex and Tether.
They additionally agreed to provide the NYAG’s office a quarterly update on USDT’s reserves backing. Said Stuart Hoegner, general counsel of Bitfinex and Tether, “We share the Attorney General’s goal of increasing transparency.”
“We would disclose. Both to the Attorney General’s Office and to the public. Additional information about Tether’s reserves on a quarterly basis.”
The NYAG’s office also acknowledged Bitfinex’s recent loan repayment to Tether. Earlier this month, Bitfinex announced that it repaid Tether the remaining loan balance of $550 million in January. Closing the credit line.