Settlement on the Cards as Bitfinex and Tether Fined 18.5M USD by NY Attorney General

By: Mark Jessy

February 26, 2021 5:17 AM

Both firms have been Fined $18.5 million and banned from operating in New York as part of a settlement over a case from 2019.

On Tuesday, Letitia James who is the NY Attorney General accused Bitfinex and Tether of hiding severe losses from investors in a statement.

She said:
“Tether and Bitfinex carelessly and unlawfully covered-up massive financial losses to stay their scheme going and protect their bottom lines."

James continued saying: “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured actuality risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing within the darkest corners of the financial set-up.”

According to the statement, the NY Attorney General’s launched an investigation that unveiled the companies made false statements about the backing of tether, stating Bitfinex used Tether’s funds to cover an $850 million financial hole at its bank.

The investigation further reveals from 2017, Tether did not have reserves to back the tether (USDT) in circulation at that time and have no access to the banking network. Although, Bitfinex claimed that it did not lose money, saying most of its crypto capital funds were seized by governments.

In response to the embargo, Tether released a statement of their own on Tuesday claiming it did nothing wrong.

As a result, Bitfinex and Tether have now been restricted from any form of trading activities associated with citizens of New York, while both firms are to regularly deliver reports on core business functions.