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Bitfinex Sued Over $850 Mln Fraud Using Tether Funds

Bitfinex Sued Over $850 Mln Fraud Using Tether Funds

Per the NY AG, both Bitfinex and Tether are engaged in fraud. Never invest more than you can afford to lose.

From the official filing being attributed to Brian Whitehurst, an assistant Attorney General, the probe started past year and seemed to have been pushed because, in spite of claims to the contrary, "Attorney General's office (OAG) thinks that Bitfinex still accepts NY-based potential investors to deposit, trade and also withdraw cryptocurrencies on the Bitfinexplatform". Multimillion-dollar accounts were protected, sometimes by the use of custodian banks in NY.

The problem is, there is a substantial divergence between the price of BTC/USD on most cryptocurrency exchanges and BitFinex. Underwood accused the exchanges of partaking in market manipulation to inflate and deflate crypto markets at their whim. "Please understand all this could be extremely risky for everybody, the entire crypto community", the executive wrote, according to the attorney general.

"These latest allegations not only bring Tether's credibility into question, they cast a dark cloud over the entire industry", Innes said. That position is contradicted by the attorney general's suit, which said Bitfinex attorneys "do not believe Crypto Capital's representations that the funds have been seized". Bank of New York Mellon (NYSE:) Corp. acted as custodian for a time, adding to the protection sophisticated investors received when dealing with Bitfinex.

Continues a statement: "On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded". Tether has said it holds $2.9 billion, according to its website. A loss of faith in Tether would be a major blow to traders who rely on it as a substitute for dollars. Tether's price fell over 1%, coming off its dollar peg.

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ShapeShift CEO Erik Voorhees made a valid observation on Twitter today, pointing out that there's some degree of irony in the charges potentially facing embattled Bitcoin exchange Bitfinex: Tether had the cash reserves, despite wide speculation that the company had issued far more crypto tokens than it could settle.

Bitfinex reportedly used Tether (USTD) to covertly cover an $850 million loss, according to details published by the New York Attorney General's office.

To support the assertion that iFinex has been misrepresenting its financial position, the report includes a number of emails, purportedly from a Bitfinex executive to Crypto Capital, desperately pleading for the release of the entrusted dollars. In return, Bitfinex credited $625 million to Tether's accounts with Crypto Capital.

It continued: "Both Bitfinex and Tether are financially strong - full stop".

The New York Attorney General, Letitia James, has revealed that the court had received court filing alleging that that iFinex Inc. - the operator of Bitfinex - Tether Limited, and their affiliates were in violation of New York law in connection with fraudulent activities, executed without the knowledge New York-based crypto investors.


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