iFinex Inc., a parent company of Bitfinex, and Tether will pay $18.5 million in penalties as the both companies have made false statements about the backing of the tether stablecoin, and about the movement of funds dollars between the two companies to cover up the truth about massive losses by Bitfinex, New York Attorney General (NYAG) Letitia James said.
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The parties have reached a settlement and Bitfinex with Tether have agreed to increase transparency of corporate and client accounts.
"Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines," said Attorney General James.
The watchdog found that Tether’s claims that its stablecoin was fully backed by US dollars at all times "was a lie." As part of the settlement, Tether will publish updates on USDT's reserves on a quarter basis. The NYAG also required Bitfinex and Tether to end all trading activity with New Yorkers.
In April 2018, the New York Attorney General’s office said that Bitfinex used Tether's funds to secretly cover $850 million loss. Back then Attorney General James said that she had had received a court order against iFinexas well as Tether, ordering them to stop violating New York law and defrauding the city's investors.
Earlier this year, Deltec, the Bahamian-based bank responsible for storing the reserves of Tether, revealed it has a significant investment in bitcoin (EXANTE: Bitcoin). The bank CIO Hugo Rogers said the company has an important investment in the benchmark crypto and had been investing clients' funds in the asset since the price of BTC amounted to $9,300.
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