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Cryptocurrency Exchange Bitfinex Covers Losses Worth $850 Million With Tether Funds


Per a recent announcement, The New York Attorney General’s office has said that Bitfinex has successfully recuperated losses worth $850 million from its reserve of Tether funds. The news was announced in a press release on April 25th.  Further, Attorney General Letitia James also mentioned that iFInex, the parent company of Bitfinex and Tether limited had purportedly violated the New York Law. James said,

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

The filings also mentioned that Bitfinex also maintained a defensive stance against their losses, and did not reveal th figures. Moreover, the matter was further fuell when Tether and Bitfinex landed in a conflict regarding corporate transactions. Bitfinex has reportedly  taken $700 million from Tether reserves to mask their losses and handle client withdrawals.

The court has now ordered the operators to immediately stop the distribution of US dollars that back Tether tokens. It has also ordered to produce documents of investigation. Furthermore, the ruling prohibits companies from destroying any investigation related document.

A twitter crypto entrepreneur Alistair Milne has also menitioned that 60 million shares of Bitfinex stock were traded as collateral. Moreover, the Attorney General is also seeking a stay order to allow Bitfinex and Tether to continue trading, in the interests of customers.

Tether was previously embroiled in a controversy after critics alledged that the coin was  operating a fractional reserve. Whereas, they didn’t have the claimed supplies. Following an order from U.S. regulators to both Bitfinex and Tether, an unofficial audit was done, which revealed that stablecoin was backed by the right amount of dollars.

In September 2018, the Office of the Attorney General revealed its Virtual Markets Integrity Initiative Report. The report threw light on  the findings by the office about the practices of “virtual asset trading platforms” operating or about to operate, in New York. Among the findings the Office highlighted the “Substantial potential for conflicts between the interests of the platform, platform insiders, and platform customers.”

Per the press release, The investigation  is being handled by Senior Enforcement Counsel John D. Castiglione and Assistant Attorney General Brian M. Whitehurst of the Investor Protection Bureau, and Assistant Attorney General Johanna Skrzypczyk of the Bureau of Internet and Technology.