New York Attorney General Letitia James demanded Bitfinex and Tether stop trading in New York, according to a statement released today. The two companies will pay $ 18.5 million to make a deal with NYAG.
“Bitfinex and Tether recklessly and illegally covered up huge financial losses to keep their scheme going and protect their financial results,” said Attorney General James. “Tether’s claims that its virtual currency has always been fully backed by US dollars were a lie. These companies obscured the real risk that investors faced and were operated by unlicensed and unregulated individuals and entities that dealt with the darkest corners of the financial system.
According to the statement, the two companies made false statements about Tether’s support and the movement of hundreds of millions of dollars between the company – to cover up losses when its ghost bank Crypto Capital had its funds confiscated by the police.
The statement made reference to the OAG investigation, which claims to have discovered that as of mid-2017, Tether had no access to the banking system and had no reserves to support Tether in circulation at the time.
As a result, Bitfinex and Tether will no longer be able to do business with citizens of New York. Companies will also need to provide regular reports on business functions, providing clear details about their funds held as reserves. Tether must provide public disclosures of the assets that support it, separated by categories, including any loans to or from affiliated entities.
Tether responds to NYAG
In a statement, Tether responded to NYAG’s findings. The company said it did not admit any wrongdoing under the agreement.
“The Attorney General’s Office concluded, in essence, that we could have done better to publicize these events publicly. Contrary to online speculation, after two and a half years it has not been discovered that Tether has issued unsupported strings or to manipulate encryption, “Tether said.
Tether acknowledged that he made the loan highlighted by NYAG, but that it has already been fully repaid. Tether said the loan did not stop the company from making bailouts at any time.