Bitfinex and Tether Settles Dispute With NYAG With $18.5 Million Penalty; Gets Barred From New York

iFinex owned Bitfinex and Tether finally settled with New York Attorney General Office (NYAG) today after nearly a 2-year long court battle. NYAG has accused Bitfinex of misappropriating $850 million worth of funds and trying to cover it via borrowing from Tether.

Tether & @Bitfinex have reached a settlement with @NewYorkStateAG. After 2.5 years and 2.5M pages of info shared, we admit to no wrongdoing and will pay US$18.5M to resolve this matter. 1/3

— Tether (@Tether_to) February 23, 2021

NYAG in its official statement said,

An agreement with iFinex, Tether, and their related entities will require them to cease any further trading activity with New Yorkers, as well as force the companies to pay $18.5 million in penalties, in addition to requiring several steps to increase transparency.

The official statement from Attorney General James also shed light on long-drawn theories about Tether’s USD reserve claiming the firm lied about its reserve. He said,

“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.

The statement further added that NYAG would prohibit Bitifinex and Tether from operating in New York.

This week, we’re taking action to end Bitfinex and Tether’s illegal activities in New York. These legal actions send a clear message that we will stand up to corporate greed whether it comes out of a traditional bank, a virtual currency trading platform, or any other type of financial institution.”

Office of Attorney General’s Investigation Reveals Tether and Bitfinex Shady Dealings

An investigation initiated by the Attorney General Office found claims of Tether about 100% reserve dating back to 2017 and 2018 to be completely false. The investigation found that Tether got no backing from any bank in 2017 to back its reserves when it published an audit report claiming to have 100% reserve.

The investigation also found that Bitfinex dwelled in shady third-party dealings when banks didn’t lend their service. The exchange suffered a significant loss to the tune of $1 billion while moving customer’s money via a third-party payment processor called Crypto Capital Corp back in 2018. When reports of liquidity crisis emerged but the exchange played down all such reports.

The report highlighted,

Bitfinex responded to pervasive public reports of liquidity problems by misleading the market and its clients. On October 7, 2018, Bitfinex claimed to “not entirely understand the arguments that purport to show us insolvent,” when, for months, its executives had been pleading with Crypto Capital to return almost a billion dollars in assets.

Even after filing the lawsuit against the firm, they continued misleading the investors and investigation agencies despite having no clue about the fund.

iFinex along with its associate firm Bitfinex and Tether has been barred from operating or offering any kind of service in New York.

In contrary to NYAG’s official settlement statement regarding Tether’s illicit business activities, Bitfinex claimed a win on the case suggesting the investigation found no wrongdoings.

Bitfinex & @Tether_to have reached a settlement with @NewYorkStateAG. After 2.5 years and 2.5M pages of info shared, we admit to no wrongdoing and will pay US$18.5M to resolve this matter. 1/3

— Bitfinex (@bitfinex) February 23, 2021

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