Tether & Bitfinex Settle NY AG’s Probe, Expect More Transparency

Bitfinex Legal Tether
Last updated:
Author
Author
Linas Kmieliauskas
About Author

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Major crypto exchange Bitfinex and Tether, the issuer of the most popular stablecoin, tether (USDT), said they have reached a settlement of legal proceedings with the New York Attorney General’s Office (AOG). However, both companies are banned from offering trading services in New York, while Tether is obliged to disclose how tethers are backed in more detail. (Updated at 14:07 UTC: updates throughout the entire text. Updated at 15:18 UTC: a new last paragraph and reactions were added. Updated on February 25, 08:29 UTC with a comment from Stuart Hoegner.)

Source: iStock/standret, Cryptonews.com

“After 2.5 years and 2.5m pages of info shared, we admit to no wrongdoing and will pay USD 18.5m to resolve this matter,” the exchange said today, adding that “the settlement amount we have agreed to pay to the Attorney General’s Office should be viewed as a measure of our desire to put this matter behind us and focus on our business.”

The settlement resolves allegations about public disclosures related to a loan Tether made to Bitfinex when Bitfinex was encountering challenges accessing approximately USD 850m in Bitfinex funds held by a payment processor in 2018. As reported, Bitfinex said it repaid the loan, including interest.

“The Attorney General’s Office concluded, in essence, that we could have done better in publicly disclosing these events. Contrary to online speculation, after two and half years there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices,” the company said, thanking the New York Attorney General’s Office “for their cooperation and professionalism.”

Meanwhile, the Office, in their own statement, sounded somewhat less friendly.

According to the AOG, iFinex — the operator of Bitfinex — and Tether made false statements about the backing of tether, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex:

“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 USD 18.5 million in penalties, in addition to requiring a number of steps to increase transparency.”

“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General Letitia James. “Tether’s claims that its virtual currency was fully backed by US dollars at all times was a lie.”

According to her, these companies obscured the risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in “the darkest corners of the financial system.”

The AOG added that Tether must offer public disclosures, by category, of the assets backing tethers, including disclosure of any loans or receivables to or from affiliated entities.

“These will be published on a quarterly basis. We anticipate that these will be published on Tether’s website,” Stuart Hoegner, General Counsel at Bitfinex and Tether, told Cryptonews.com, declining to elaborate any further.

Also, both Bitfinex and Tether will need to report, on a quarterly basis, that they are properly segregating corporate and client accounts, including segregation of government-issued and virtual currency trading accounts by company executives, as well as submit to mandatory reporting regarding transfers of assets between and among Bitfinex and Tether entities, the OAG said.
___

Reactions:

___
Learn more:
Crypto Industry Players Dismiss Reports of Manipulated Bitcoin Rally
New York Attorney General Hits Back at Bitfinex, Tether
How Merlin Lost Patience Trying to Save Bitfinex’s USD 851 million
Bitfinex, Tether Hit with ‘USD 851 million Cover-up’ Wrap

More Articles

Bitcoin News
Bitcoin Analyst PlanB Moves Entire BTC Holdings to Spot ETFs for “Peace of Mind”
Ruholamin Haqshanas
Ruholamin Haqshanas
2025-02-16 10:12:34
Altcoin News
Pantera Capital’s Dan Morehead Under Federal Tax Investigation After Move to Puerto Rico
Ruholamin Haqshanas
Ruholamin Haqshanas
2025-02-16 10:10:26
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors