Tether and Bitfinex Reach an Agreement with New York Attorney General’s Office

In the latest news between Tether and Btifinex, both companies have reached a settlement and shoe hand together in order to build cooperation and new agendas but wrongdoing. To provide the background context of this news, According to the NYAG, Bitfinex and Tether sought to conceal a loss of $850 million in customer assets. Tether also allegedly misled that its stablecoin had appropriate reserves of one US dollar for each Tether coin, according to the NYAG. Bitfinex and Tether agreed to pay $18.5 million, stop trading with New York residents and companies, and supply the NYAG with quarterly transparency reports as part of the settlement.

The agreement resolves accusations of public disclosures relating to a loan Tether made to Bitfinex in 2018, while Bitfinex was having difficulty accessing about US$850 million in Bitfinex cash held by a payment processor. These incidents are well-known by now. 

The loan was issued to safeguard Bitfinex’s clients’ security. It was reimbursed early and in full, including interest, since then. Tether’s ability to handle redemptions was not harmed as a result of the loan.

Tether had a banking arrangement with multiple Taiwanese banks in its early years, with Wells Fargo serving as the correspondent bank. Tether was forced to locate a new banking partner after Wells Fargo refused to execute any further US dollar wire transfers in March 2017. There was about 51 million Tether in circulation at this point, and the firm was still “printing” additional tether at a faster rate.

Users could swap fiat currency for virtual currency (e.g., US dollars, Euros, etc.) and vice versa on Bitfinex. Bitfinex has to rely on third-party payment processors to make deposits and withdrawals possible. It was challenging to find banks ready to take on these activities in 2017 and 2018, as they were widely regarded as exceedingly dangerous. As a result, Bitfinex entrusted the processing of deposits and withdrawals to Crypto Capital Corp., a Panama-based company. Crypto Capital had over $1 billion in funds from Bitfinex users as of May 2018.

For a better understanding, Bitfinex serves as the cryptocurrency exchange where you make your transactions and gain the cryptocurrency. Not only that, Bitfinex provides other services too to its users. Whereas Tether is a stable coin whose value does not fluctuate and remains equal to $1. 

Casting aside the Attorney General’s claim that these disclosure concerns are misrepresentations or infractions of any legal requirement, we agree with the Attorney General’s purpose of more transparency. As a result, we voluntarily provided the Attorney General with information about the composition of Tether’s reserves last year, and we proposed that as part of the settlement agreement, we would disclose extra information about Tether’s reserves to both the Attorney General’s office and the public. This is not a commitment we make grudgingly; it is one we eagerly accept – the statement of the companies. 

Now both companies have reached the settlement they are thankful for the professionalism of the Attorney General.