State of NY alleges Bitfinex used $850M of Tether funds to hide losses, Bitfinex refutes

posted over 4 years ago
A government lawyer from the state of New York alleges Bitfinex used at least $700 million from Tether’s cash reserves to cover up an $850 million loss of customer funds. Specifically, Bitfinex borrowed ~700mil from Tether, Bitfinex paid a 'fair' interest rate on this loan, and 60 million shares in Bitfinex were pledged as collateral. The state attorney claims this ‘loss of funds’ and movement of reserves was not disclosed by operator of both Bitfinex and Tether, iFinex. Therefore, it had “engaged in a cover-up to hide the apparent loss of $850 million of co-mingled client and corporate funds.”

Binfinex refutes the claim as ‘riddled with false assertions’ and that funds are not lost and have “been, in fact, seized and safeguarded,” and that it is actively working to get those funds released. Twitter users have urged exchanges to clean up their acts regarding transparency, disclosure, and proof of solvency, to avoid such situations. In any case, it’s important to note that there are no criminal charges being sought at this time, but an investigation is open.
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