The much-discussed conflict between Bitfinex and Tether has now come to an end; the parties have reached a settlement. The deal resulted in both iFinex and Tether promising to pay $18.5 million in fines. Crypto companies, however, have acknowledged no wrongdoing, but are now obliged to stop trading in New York. In addition to mandating firms to follow a range of ‘increase accountability’ procedures, Letitia James of NYAG stated:
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines.
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.”
The firm’s legal representative, Charles Michael, replied that “after two and a half years of investigation,” the conclusions of the regulators were limited to “the nature and timing of certain disclosures.”
And contrary to online speculation, there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices.
He also said that this deal also “resolves public disclosure claims” about Tether’s loan to Bitfinex.
In 2018, the U.S. Department of Justice accused iFinex, owner of Bitfinex Exchange, of using a $750 million loan to exploit losses. At the same time, DoJ reported that Tether was printing his stablecoin without full backing. As of last year, regulators have asked both crypto companies to hand over the case-related documents to NYAG. Many in space followed closely the event, which at times created a USDt-associated FUD setting.
On 6 February, Bitfinex repaid a $750 million loan to Tether, cancelling the $900 million credit line between iFinex Inc and the stablecoin issuer.
As part of the settlement, NYAG required that businesses should reveal core business operations and report on the “segregation of corporate and client accounts” on a quarterly basis, including the segregation of government-issued and crypto trading accounts by company executives.
Tether must also publicly reveal the properties underpinning the stablecoin. These reports include, among other mandatory reporting provisions, any “loans or receivables to or from affiliated entities” such as:
“The companies will also provide greater transparency and mandatory reporting regarding the use of non-bank “payment processors” or other entities used to transmit client funds.”
Indicating their approval of the conditions, the General Counsel of Bitfinex and Tether, Stuart Hoegner, said that the settlement amounted to “a measure of our desire to put this matter behind us and to focus on our business.”
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