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Mar 10, 2020

The New York Attorney General’s (NYAG) Office allege that Bitfinex and associated stablecoin firm Tether covered up an $850 million loss and in doing so, misled investors in the state of New York.

Instead, Bitfinex, once the world’s largest exchange, claims to have borrowed this money from Tether after it claimed it was having problems with its banking partners. Bitfinex has purported that its payment processor, the Panama-based Crypto Capital Corp., froze $850 million of its assets. To ensure solvency, Bitfinex borrowed $700 million from Tether. Or so their story goes.

This move received tremendous criticism and prompted an investigation by New York Attorney General Letitia James. And this lady is no pushover. She is quoted as saying, “It is particularly perverse for respondents to criticize the adequacy of [the Office of the Attorney General’s] potential legal claims when respondents are the ones who have refused to disclose documents and information that would be directly relevant to their liability.” So, she has made it public she is not a fan, and for good reason.

Furthermore, Bitfinex and Tether have been accused of manipulating the price of Bitcoin and the whole market. In late 2019, the entities were sued over a study claiming to have proven the manipulation. The applicants in a lawsuit claim that USDT was used to purchase Bitcoin and consequently inflate the crypto market, fuelling the bull market run in late 2017 and the subsequent fall of the price of BTC.

And for the best roundup, I have seen yet, although it now has a time gap is this one https://amycastor.com/2019/01/17/the-curious-case-of-tether-a-complete-timeline-of-events/. It is a must-read. I only wish she, or someone else, would finish it!

Join me, host Aviva Õunap and lawyer Jonathan Dunsmoor from Dunsmoor Law as we explore this topic and see just what Tether, Binance, and iFinex (the parent company of the latter two) have done to draw ire from the NYAG.

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