The New York Attorney General has said that crypto exchange Bitfinex lost $850 million and utilized Tether reserves to cover the lost amount, according to a report announced on April 25.
According to a judicial filing, Bitfinex encumbered the assets of Tether to pay out clients asking retreats from the exchange. Attorney General Letitia James unveiled that her office received a court filing claiming that iFinex Inc. — the driver of Bitfinex — Tether Limited, and their linked realities were in breach of New York law in association with exercises that may have cheated New York-based crypto 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 a co-mingled client and corporate funds. 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.
According to the filings, Bitfinex has previously accepted at least $700 million from Tether’s reserves. Those transactions – which also have not been revealed to investors and are being managed to cover Bitfinex’s huge, undisclosed damages and failure to control customer retreats. The Office’s filings further describe how the organizations muddled the amount and timing of these corporate transactions during the Office’s inquiry.
The court has reportedly directed the directors of the companies to instantly stop the distribution of the United States dollars that support tether tokens and to present investigation-related data and records. The judgment also prevents organizations from damaging potentially associated reports.
There are lots of speculations over the past few days that tether really is not supported by anything or if it is supported by anything it is partially reserved rather than 100% supported by the US dollar. These speculations are because of a number of worrying events about tether throughout 2017 and 2018 and also the highly correlated growth between tether issuance and bitcoin price raises several questions like.
Disclaimer: This information should not be interpreted as an endorsement of any cryptocurrency. It is not a recommendation to trade. The crypto market is full of surprises and overhyped assets. Do your research before buying anything. Do not invest more than you can afford to lose.