U.S. dollars in reserve. However, an investigation by the Office of the Attorney General (OAG) found that iFinex — the operator of Bitfinex — and Tether made false statements about the backing of the “tether” stablecoin, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex. An agreement with iFinex, Tether, and their related entities will require them to cease any further trading activity with New Yorkers, as well as force the companies to pay $18.5 million in penalties, in addition to requiring a number of steps to increase transparency.

“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. “Tether’s claims that its virtual currency was fully backed by U.S.


Bitfinex and Tether Banned from Continuing Illegal Activities in New York

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.

Further, the companies must submit to mandatory reporting on core business functions. Specifically, both Bitfinex and Tether will need to report, on a quarterly basis, that they are properly segregating corporate and client accounts, including segregation of government-issued and virtual currency trading accounts by company executives, as well as submit to mandatory reporting regarding transfers of assets between and among Bitfinex and Tether entities.

Bitfinex 18.5m new york

This resolution makes clear that those trading virtual currencies in New York state who think they can avoid our laws cannot and will not. Last week, we sued to shut down Coinseed for its fraudulent conduct. This week, we’re taking action to end Bitfinex and Tether’s illegal activities in New York.


These legal actions send a clear message that we will stand up to corporate greed whether it comes out of a traditional bank, a virtual currency trading platform, or any other type of financial institution.”

A Stablecoin Without Stability – Tethers Weren’t Fully Backed At All Times

The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations.

Bitfinex 18.5m new yorker

Bitfinex and Tether Must Submit to Mandatory Reporting on Efforts to Stop New York Trading

Bitfinex and Tether Deceived Clients and Market by Overstating Reserves, Hiding Approximately $850 Million in Losses Around the Globe

NEW YORK – New York Attorney General Letitia James today continued her efforts to protect investors from fraudulent and deceptive virtual or “crypto” currency trading platforms by requiring Bitfinex and Tether to end all trading activity with New Yorkers. Millions around the country and the world today use virtual currencies as decentralized digital currencies — unlike real, regulated government currencies, including the U.S. dollar — to buy goods and services, often times anonymously, through secure online transactions.

Bitfinex 18.5m new yorke

In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’

On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether.

Bitfinex 18.5m new yorkers

Additionally, Tether must offer public disclosures, by category, of the assets backing tethers, including disclosure of any loans or receivables to or from affiliated entities. 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.

Finally, Bitfinex and Tether will be required to pay $18.5 million in penalties to the state of New York.

In September 2018, the OAG issued its Virtual Markets Integrity Initiative Report, which highlighted the “substantial potential for conflicts between the interests” of virtual currency trading platforms, insiders, and issuers. Bitfinex was one of the trading platforms examined in the report.

This matter was handled by Senior Enforcement Counsel John D.
Castiglione and Assistant Attorneys General Brian M.

Whitehurst and Tanya Trakht of the Investor Protection Bureau; Assistant Attorneys General Ezra Sternstein and Johanna Skrzypczyk of the Bureau of Internet and Technology; and Legal Assistant Charmaine Blake — all supervised by Bureau of Internet and Technology Chief Kim Berger and Senior Enforcement Counsel for Economic Justice Kevin Wallace. The Investor Protection Bureau is led by Chief Peter Pope. Both the Bureau of Internet and Technology and the Investor Protection Bureau are part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.

In brief:

  • The NY Attorney General’s office has settled with Bitfinex and Tether
  • Bitfinex and Tether will cease all operations in New York
  • They will also pay an $18.5 million fine alongside other requirements to increase transparency

The New York Attorney General’s office has reached an $18.5 million settlement with Bitfinex and Tether for alleged illegal activities in the state of NY. According to the official announcement, New York’s Attorney General, Letitia James, also ordered Bitfinex and Tether to cease all operations in the state as a means of protecting investors from fraudulent and deceptive activities of both companies.

Attorney General James pointed out that both Bitfinex and Tether made false statements about backing their stablecoin of Tether with actual US dollars.

Moreover, they moved hundreds of millions of dollars to cover up the apparent loss of $850 million of the commingled client and corporate funds.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

James said the settlement with Hong Kong-based iFinex Inc and related entities will likewise expect them to stop trading activity with New Yorkers. More so, he added the redirection broke Tether’s public guarantee to investors.

In addition, these companies must submit regular reports to the OAG to ensure compliance with this prohibition.

Further, the companies must submit to mandatory reporting on core business functions. Specifically, both Bitfinex and Tether will need to report, on a quarterly basis, that they are properly segregating corporate and client accounts, including segregation of government-issued and virtual currency trading accounts by company executives, as well as submit to mandatory reporting regarding transfers of assets between and among Bitfinex and Tether entities. Additionally, Tether must offer public disclosures, by category, of the assets backing tethers, including disclosure of any loans or receivables to or from affiliated entities.

Similar Posts:

Leave a comment