New York AG bans Tether, Bitfinex over false claims about USD backing and losses
New York Attorney General Letitia James has disclosed that cryptocurrency trading platforms Bitfinex and Tether have been banned from offering their services in the state.
The Attorney General revealed this via an official tweet, noting that both crypto exchanges will be barred from New York and will pay hefty fines for false claims about Tether’s backing as well as concealing losses at Bitfinex.
The tweet read,
We’re ending @bitfinex and @Tether_to‘s virtual currency trading in New York after the companies covered up about $850 million in losses around the globe and deceived the market by overstating reserves.
Those trading virtual currencies in New York cannot avoid our laws, period.
— NY AG James (@NewYorkStateAG) February 23, 2021
Letitia James explained that Bitfinex claimed that one-for-one holdings in U.S. dollars backed its stable coin Tether (USDT). While in actual fact, the crypto platform “made false statements about the backing of the stable coin.”
Also, the crypto trading platform disclosed false information about the transfer of millions of dollars between the two firms to cover up immense losses, which is pegged at $850 million.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” James said.
Additionally, the Attorney General noted that after almost three years of legal battle, Bitfinex and Tether finally agreed to all end their trading activities in the state of New York as well as pay $18.5 million in fines.
Tether and Bitfinex peaceful settlement
Meanwhile, Tether and Bitfinex, in a series of tweets respectively, also announced the settlement of their lawsuit with the state of New York. However, unlike New York Attorney General Letitia James’ claim, both companies admitted to no wrongdoing.
The tweet read,
No finding that Tether ever issued without backing or to impact crypto prices. This settlement shows our commitment to the future of the industry, and to transparency with quarterly disclosures of @tether_to reserves going forward. 2/3
— Bitfinex (@bitfinex) February 23, 2021
Jason Weinstein, counsel to Bitfinex and Tether, noted no established evidence that Tether ever issued its digital asset without backing, unlike many speculations and rumors.
Additionally, via an official blog post, Tether noted that the firm had worked in full cooperation with the Attorney General’s Office and provided more than 2.5 million pages of documentation to clear its name over the past two and a half years.
“Putting aside the Attorney General’s characterization of these disclosure issues as misrepresentations or violations of any legal obligation, we share the Attorney General’s goal of increasing transparency,” Tether said.