After more than 2 years and over 2 million information pages, sister companies Bitfinex and Tether have finally settled with New York Attorney General’s Office.
Tether, which has denied any wrongdoing, said that an $18.5 million settlement fee will be paid to resolve the matter.
— Tether (@Tether_to) February 23, 2021
$18.5 million settlement with no admission of wrongdoing
Tether’s agreement to pay the $18.5 million settlement fee is “a measure of our desire to put this matter behind us and focus on our business,” the stablecoin issuer said.
The settlement resolves allegations that iFinex – the parent company of crypto exchange Bitfinex and Tether – lied about the Tether (USDT) stablecoin and the hundreds of millions of dollars that exchanged hands to cover up Bitfinex’s massive losses.
The New York Attorney General’s Office alleges that Bitfinex and Tether failed to disclose losses amounting to $850 million and deceived clients and markets by overstating reserves.
The matter unfolded when Tether made a loan to Bitfinex after the latter failed to access approximately $850 million in funds held by a payment processor in 2018.
Tether claims to have opened a $900 million line of credit to Bitfinex in 2018. The exchange announced early this month that it repaid an outstanding $550 million loan balance it owed Tether.
However, New York Attorney General Letitia James sees the matter in a different light.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said the Attorney General.
New York out of bounds
Apart from the $18.5 million settlement, the two companies have been barred from operating in New York.
“Today’s agreement requires Bitfinex and Tether to discontinue any trading activity with New Yorkers. In addition, these companies must submit regular reports to the OAG to ensure compliance with this prohibition,” said the Attorney General’s Office.
A backed stablecoin
The New York Attorney General’s Office maintains that Tether stablecoin was not always fully backed by cash reserves on a 1:1 pegging against the US dollar.
In its post, Tether pointed out that there was no finding after 2.5 years that the company “issued tethers without backing” or manipulated crypto prices.
Tether is the market leader in the stablecoin market segment and has a market capitalization of $34.7 billion.