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Ultimate Resource On Tether And Bitfinex’s Supposed Market Manipulation (#GotBitcoin?)

A New York-based legal firm has filed a lawsuit against Tether and Bitfinex, accusing them of cryptocurrency market manipulation. Ultimate Resource On Tether And Bitfinex’s Supposed Market Manipulation (#GotBitcoin?)

“Largest Bubble In History”

Roche Freedman filed a class-action suit claiming that stablecoin firm Tether and its affiliate crypto exchange Bitfinex have been involved in defrauding investors, manipulating markets and concealing illicit proceeds, the firm’s founding partner Kyle Roche tweeted on Oct. 7.

In the tweet, Roche accused Tether and Bitfinex of creating the “largest bubble in history.”

Filed on Oct. 6, the complaint document states that Bitfinex and Tether primarily accomplished a “sophisticated scheme” involving “part-fraud, part-pump-and-dump, and part-money laundering.”

Suit alleges that backing asset claims were false

In the lawsuit, Roche Freedman argued that Tether’s claim of backing the number of its Tether tokens (USDT) by equal amounts of United States dollars was a lie. Instead, the firm says that Tether “issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices.” The document reads:

“Because the market believed the lie that one USDT equaled one U.S. dollar, Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created.”

Tether And Bitfinex Expected The Lawsuit

The lawsuit filing comes two days after both Tether and Bitfinex published statements claiming that they had become aware of an unreleased paper “falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market.” Urging that the paper contained “baseless accusations,” Tether and Bitfinex said that they will vigorously defend themselves if lawyers use the source to launch a lawsuit.

Updated: 11-4-2019

Large Bitcoin Player Manipulated Price Sharply Higher, Study Says

‘Stablecoin’ tether, Bitfinex exchange reportedly used to drive up cryptocurrency’s price in 2017 and 2018.

A single large player manipulated the price of bitcoin as it ran up to a peak of nearly $20,000 two years ago, a new study concludes.

The study reviewed the period between March 2017 and March 2018, when the price of bitcoin soared and its total market value rose to $326 billion. About half of that increase was due to the influence of a manipulation scheme, according to the study’s authors.

They said the unknown manipulator operated from a single account at Bitfinex, the largest cryptocurrency exchange at the time. The manipulator used another cryptocurrency, called tether, to boost demand for bitcoin, leading to the price surge.

It isn’t clear by how much or if the manipulator profited. Bitcoin traded at nearly $9,200 on Sunday.

The study—written by John M. Griffin, a finance professor at the University of Texas with a background in forensics, and Ohio State University finance professor Amin Shams —was accepted for publication by the influential Journal of Finance and will be published online Monday. An earlier version of the study argued tether was being used to manipulate bitcoin prices, but didn’t connect the scheme to one entity.

The paper doesn’t definitively conclude who the manipulator was. But it strongly suggests Bitfinex executives either knew of the scheme or were aiding it.

“If it’s not Bitfinex,” Mr. Griffin said in an interview, “it’s somebody they do business with very frequently.”

Bitfinex dismissed the study’s findings. Stuart Hoegner, the company’s general counsel, said it “lacks academic rigor” and offered no proof of its claims. “It is the global rise of digital currency that has driven the market’s demand for tether,” he said.

Bitfinex and the company that controls tether, called Tether Ltd., have common ownership and are run by the same executives. Both companies are being investigated for alleged fraud by the Justice Department and the New York Attorney General’s office.

Tether is similar to bitcoin, but with key differences: Bitcoin trades freely, while tether’s value is pegged to the dollar via an asset reserve. For every tether in circulation, there purportedly is $1 in the reserve. This kind of digital currency is called a stablecoin.

If the price of bitcoin was manipulated, this would undermine a key feature of the crypto market, said Mr. Shams. “The promise of a decentralized financial system was that it would be free from the influence of banks and governments,” he said. “Ironically, there are large, new entities that have gained centralized control.”

For their study, the two professors mapped the entire transaction history of bitcoin and tether, a process that involved sifting through more than 200 gigabytes of data. They then traced the movement of the two currencies.

That enabled then to show how tethers moved across various exchanges and were traded for bitcoins. Rather than showing a random pattern that would indicate broad demand, they instead found tethers flowed through tightly clustered pathways—starting with one large account at Bitfinex—indicating control by a single entity.

Tether has become primarily an asset used by crypto exchanges to facilitate trading. About 75% of all bitcoin trading is in exchange for tethers, according to data from research firm CryptoCompare.

According to Tether, it creates new units of tether whenever it gets orders from its customers. But the company has released only limited information to prove reserves exist. In April, the company revealed in a court filing that tether was only 74% backed by reserves.

If new tethers were being created in response to orders, then the price of bitcoin would reflect natural demand.

If tethers were being “printed” without backing, that could lead to artificial demand if they were used to purchase bitcoin. In some ways this is akin to central banks or governments printing money to stimulate economies, often leading to inflation.

The Griffin-Shams study set out to determine whether tethers were being printed in response to user demand. The authors laid out and tested a number of hypotheses to see if Tether’s claims of dollar backing for tethers could be proven or disproved. The study’s conclusion was tether was being printed regardless of customer orders.

One pattern was especially illustrative: The study looked at 95 nonconsecutive hours that comprised the largest percentage of tether dispersals. This showed a consistent pattern: In the three hours before those dispersals, the price of bitcoin was falling. Immediately after the dispersal, the price began rising. Those 95 hours accounted for 59% of bitcoin’s compounded returns between March 2017 and March 2018.

“Even a fairly small amount of capital can manipulate the price of bitcoin,” Prof. Griffin said.

To be sure, the data could have other interpretations: The authors, for instance, didn’t have access to Bitfinex’s and Tether’s bank accounts. That information would show definitively whether the companies were creating new units of tether in response to real customer demand.

Updated: 11-25-2019

Another Class Lawsuit Claims Bitfinex, Tether Manipulated Bitcoin Market

Crypto exchange Bitfinex and its sister firm, stablecoin issuer Tether, have again been accused of working to manipulate the bitcoin markets.

A new class-action suit, filed by Eric Young and Adam Kurtz at the district court in the Western District of Washington on Nov. 22, draws heavily from details that emerged in the case brought by the New York attorney general in April against the same two firms.

It’s also the second class action to have been brought in recent months relying on the New York case, which is still ongoing as the defendants appeal over whether they must continue to produce documentation. The attorney general claims, among other things, that that the tether (USDT) stablecoin was not fully backed by U.S. dollars.

In a lengthy list of claims, Young and Kurtz specifically allege that Bitfinex and Tether “monopolized and conspired to monopolize the Bitcoin market,” as well as manipulated the market, manipulated information or made inaccurate claims.

Further, “Defendants’ misconduct caused prices of Bitcoin futures, and the prices of Bitcoin underlying the Bitcoin futures, to be artificial during the Class Period [Oct. 1, 2014 to present],” Young and Kurtz say, adding:

“Defendants’ control of USD₮ issuances and Bitfinex permitted Defendants and their co-conspirators to coordinate purchases and sales with rising and falling Bitcoin prices. When Bitcoin prices were falling, Defendants and their co-conspirators printed USD₮s and artificially increased the price of Bitcoin. Once Defendants and their co-conspirators artificially inflated the price of Bitcoin, Defendants and their co-conspirators then converted the Bitcoin back into USD₮s to replenish Tether’s reserves.”

Both lawsuits also cite a study authored by professors at the University of Texas at Austin claiming that a single Bitfinex account used USDT to inflate the price of bitcoin in the lead up to its 2017 all-time high of around $20,000.

While the case has been brought at the federal court in Washington State, Young and Kurtz are based in Pennsylvania and New York, respectively. Both say they are bitcoin traders who traded at artificial prices due to the alleged actions of the defendants.

“At all relevant times, Defendants, including the employees that conducted Defendants’ affairs through illegal acts, knowingly and intentionally made false statements to U.S. Bitcoin investors and the public for the purpose of concealing Defendants’ scheme,” the suit states, further alleging that the defendants profited at plaintiffs’ expense.

Bitfinex took to its blog Sunday to call the Washington case “mercenary and baseless,” and suggest that such lawsuits “are a continuing affront to the efforts and dedication of Bitfinex’s customers and all participants in the digital currency ecosystem.”

“As we predicted last month, mercenary lawyers continue to try to use Bitfinex and Tether to obtain a payday. To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course,” the exchange wrote.

The U.S. Department of Justice has reportedly looking into the allegations of market manipulation for some time, but has not yet made any conclusions public.

Is Bitcoin Market Manipulation Profitable? | December 4th 2019 #MarketsDaily

Updated: 12-9-2019

Large Bitcoin Player Manipulated Price Sharply Higher, Study Says

‘Stablecoin’ tether, Bitfinex exchange reportedly used to drive up cryptocurrency’s price in 2017 and 2018.

A single large player manipulated the price of bitcoin as it ran up to a peak of nearly $20,000 two years ago, a new study concludes.

The study reviewed the period between March 2017 and March 2018, when the price of bitcoin soared and its total market value rose to $326 billion. About half of that increase was due to the influence of a manipulation scheme, according to the study’s authors.

They said the unknown manipulator operated from a single account at Bitfinex, the largest cryptocurrency exchange at the time. The manipulator used another cryptocurrency, called tether, to boost demand for bitcoin, leading to the price surge.

It isn’t clear by how much or if the manipulator profited. Bitcoin traded at nearly $9,200 on Sunday.

The study—written by John M. Griffin, a finance professor at the University of Texas with a background in forensics, and Ohio State University finance professor Amin Shams —was accepted for publication by the influential Journal of Finance and will be published online Monday. An earlier version of the study argued tether was being used to manipulate bitcoin prices, but didn’t connect the scheme to one entity.

The paper doesn’t definitively conclude who the manipulator was. But it strongly suggests Bitfinex executives either knew of the scheme or were aiding it.

“If it’s not Bitfinex,” Mr. Griffin said in an interview, “it’s somebody they do business with very frequently.”

Bitfinex dismissed the study’s findings. Stuart Hoegner, the company’s general counsel, said it “lacks academic rigor” and offered no proof of its claims. “It is the global rise of digital currency that has driven the market’s demand for tether,” he said.

Bitfinex and the company that controls tether, called Tether Ltd., have common ownership and are run by the same executives. Both companies are being investigated for alleged fraud by the Justice Department and the New York Attorney General’s office.

Tether is similar to bitcoin, but with key differences: Bitcoin trades freely, while tether’s value is pegged to the dollar via an asset reserve. For every tether in circulation, there purportedly is $1 in the reserve. This kind of digital currency is called a stablecoin.

If the price of bitcoin was manipulated, this would undermine a key feature of the crypto market, said Mr. Shams. “The promise of a decentralized financial system was that it would be free from the influence of banks and governments,” he said. “Ironically, there are large, new entities that have gained centralized control.”

For their study, the two professors mapped the entire transaction history of bitcoin and tether, a process that involved sifting through more than 200 gigabytes of data. They then traced the movement of the two currencies.

That enabled then to show how tethers moved across various exchanges and were traded for bitcoins. Rather than showing a random pattern that would indicate broad demand, they instead found tethers flowed through tightly clustered pathways—starting with one large account at Bitfinex—indicating control by a single entity.

Tether has become primarily an asset used by crypto exchanges to facilitate trading. About 75% of all bitcoin trading is in exchange for tethers, according to data from research firm CryptoCompare.

According to Tether, it creates new units of tether whenever it gets orders from its customers. But the company has released only limited information to prove reserves exist. In April, the company revealed in a court filing that tether was only 74% backed by reserves.

If new tethers were being created in response to orders, then the price of bitcoin would reflect natural demand.

If tethers were being “printed” without backing, that could lead to artificial demand if they were used to purchase bitcoin. In some ways this is akin to central banks or governments printing money to stimulate economies, often leading to inflation.

The Griffin-Shams study set out to determine whether tethers were being printed in response to user demand. The authors laid out and tested a number of hypotheses to see if Tether’s claims of dollar backing for tethers could be proven or disproved. The study’s conclusion was tether was being printed regardless of customer orders.

One pattern was especially illustrative: The study looked at 95 nonconsecutive hours that comprised the largest percentage of tether dispersals. This showed a consistent pattern: In the three hours before those dispersals, the price of bitcoin was falling. Immediately after the dispersal, the price began rising. Those 95 hours accounted for 59% of bitcoin’s compounded returns between March 2017 and March 2018.

“Even a fairly small amount of capital can manipulate the price of bitcoin,” Prof. Griffin said.

To be sure, the data could have other interpretations: The authors, for instance, didn’t have access to Bitfinex’s and Tether’s bank accounts. That information would show definitively whether the companies were creating new units of tether in response to real customer demand.

Updated: 1-30-2020

Antonopoulos Writes To Judge Vouching For Law Team Suing Bitfinex For BTC Manipulation

One of the biggest names in crypto has joined in an ongoing argument about who will lead the class-action suit against Bitfinex and its affiliates over alleged market manipulation leading to Bitcoin’s 2017 bull run.

Antonopoulos’s Affidavit

Amid a flurry of filings seeking to lead the class, Andreas Antonopoulos has come out in support of the legal team of Liebowitz, filing an affidavit on Jan. 27 vouching for the expertise of the team — which Antonopoulos has seen in action on the Kleiman v. Wright case.

Liebowitz’s representation includes a laundry list of attorneys from three separate firms, but Antonopoulos specifically commended Kyle Roche of Roche Cyrulnik Freedman as the reason the firm should lead the proceedings. Before calling the firm “uniquely qualified to represent members of the class,” Antonopoulos wrote:

“In the Kleiman matter, Mr. Roche has repeatedly demonstrated an understanding of the technical and functional properties of bitcoin, cryptocurrencies, blockchain, and their underlying cryptographic principles superior to many other attorneys.”

The Fight To Lead The Class

Antonopoulos’ opinion on the matter is just one of a host of filings in recent weeks as three separate firms seek to lead the class i.e. run the legal proceedings.

In recent months, Bitfinex alongside related companies Tether and iFinex have seen four separate class-action complaints filed against them, all alleging market manipulation and all identifying the class as anyone in the United States who transacted in Bitcoin since mid-2017, or possibly earlier — potentially a huge demographic.

The first of the four plaintiffs was Liebowitz in October, followed by Young in November and Ebanks and Faubus earlier in January. Earlier this week, the presiding judge ordered those four cases to consolidate. However, the question of leadership has remained.

Karen Lerner, lead attorney for Young, argued for leadership by law firms Radice and Kirby McInerny, telling Cointelegraph that their complaint stood out based on “significant investment of resources that resulted from our rigorous market analysis.”

In turn, Kyle Roche told Cointelegraph that “Our firm brings unparalleled experience and expertise in cryptocurrency litigation,” while also promoting the complaint brought by Roche Cyrulnik Freedman on behalf of Liebowitz as “the most legally sound and well-researched.”

Regarding the stakes of the case, Lerner explained that the case seeks to give money back to those who bought Bitcoin in recent years:

“This class action seeks to compensate investors in Bitcoin and Bitcoin futures for damages from paying an artificial price compared to what they should have paid if the price had not been manipulated by the Defendants.”

The firms will have until Feb. 7 to file oppositions to each other’s motions, per a Jan. 28 order from the presiding Judge Failla. Likely this is in order to allow the firms who filed their initial complaints only in January time to respond to the flurry of filings in the past several days.

Origins Of The Allegations

Research by John Griffin and Amin Shams initially published in June 2018 initially spread the theory that a single whale trading USDT on Bitfinex successfully manipulated the Bitcoin market. The researchers updated their work near the end of 2019 to specify Bitfinex as the likely culprit.

As Cointelegraph reported, Bitfinex and Tether have publically dismissed the single-whale theory as well as the subsequent lawsuits, which they called “mercenary and baseless.”

Updated: 1-11-2021

Tether Mints Record 2B USDT In One Week

Tether printed two billion dollar-backed tokens last week, a new record for the leading stablecoin project.

Over 24.6 billion tethers now circulate across Ethereum, Tron and Bitcoin’s Omni Layer, per data from Coin Metrics, up from 4.8 billion one year ago.

The growth comes from a variety of factors, said Sam Trabucco, quantitative trader at Alameda Research. “Some [people] don’t put trust in their local banks or currencies,” he said, in which case using USDT is the “most liquid USD-like exposure the market has access to.”

Growth also comes when traders start to “aggressively sell BTC (-17.45%) into USDT” or vice versa, Trabucco noted, which can cause the dollar-pegged token to temporarily trade above or below its peg.

For nearly all of January so far, USDT has traded slightly above $1 until early Monday morning when it dropped below the mark, per market data from U.S.-based cryptocurrency exchange Kraken.

Per Tether and Bitfinex CTO Paolo Ardoino, new deep-pocketed institutional bitcoin investors like MicroStrategy or Ruffer Invest executing over-the-counter (OTC) buy orders has also cause significant USDT supply growth.

“Among Tether customers are all the major OTC desks and high frequency trading firms in the space,” Ardoino told CoinDesk in a direct message. Taking the buyer’s funds, OTC desks will routinely convert to USDT and spread the buying pressure across all possible liquid venues, creating demand for more stablecoins.

Trabucco also noted “heightened volumes” across all cryptocurrency trading venues over the past few weeks combined with “the ability to use USDT as collateral for an increasing number of derivatives products” as additional reasons for tether’s substantial supply growth.

Notably, trading volumes for markets quoted in USDT continue to surpass bitcoin-quoted pairs, which used to be where most trading volume concentrated.

For Tether, all of these combined market dynamics “have led to an increase in creation”, Trabucco said.

Concurrent with its meteoric supply growth, increased attention has been paid to questions about Tether’s backing, an issue that is even the subject of an inquiry by the New York State Attorney General’s office.

Per prior court statements, Tether reserves include cash, short-term reserves and other cryptocurrencies. But no bank statements or legal documents supporting this claim have been published since 2018, when Bahamas-based Deltec Bank published an unsigned letter affirming that Tether held $1.8 billion in reserves, matching the amount of USDT issued at the time.

In April 2019, Tether’s supply was only about 74% backed by fiat equivalents, per a statement from its general counsel. But, reiterating a later statement made in November 2019, Ardoino took to Twitter on New Year’s Eve saying, “Tether is fully backed, full stop.”

Updated: 1-20-2021

Tether And Bitfinex Seek Further 30 Days To Produce Critical Trial Documents

iFinex Inc needs another 30 days to produce trial documents for the New York Attorney General.

iFinex Inc — the parent company of crypto exchange Bitfinex and stablecoin issuer Tether (USDT) — has written to the New York Supreme Court requesting that its upcoming trial date be pushed back even further.

According to a filing submitted to the New York court system on Jan. 19, the legal counsel for iFinex Inc requested another 30 days to produce the documents demanded by the Office of the Attorney General (OAG).

The document production process was supposed to be completed by Jan. 15 — a date which itself was an extension on the original deadline of Dec. 16. Legal counsel for the defendant, Charles Michael, said in Tuesday’s court filing that a “substantial volume” of material had already been handed over to the OAG, but that there remained “supplemental agreed-upon items” that still had to be sourced.

The filing noted that, in addition to the time it will take to produce the documents in question, extra time will also have to be set aside for the OAG to analyze their importance. The filing states:

“The parties will need a few more weeks to produce the supplemental information, for OAG to review the production, and to discuss further among themselves what if any further proceedings may be necessary.”

The ongoing legal battle extends back to April 2019, when the New York Attorney General alleged that Bitfinex had attempted to cover up the loss of $850 million of customers’ funds by taking illegal loans from Tether, with which it shares executive leadership. The defendants are also alleged to have operated an illegal securities offering.

The investigation by the NYAG had previously revealed that no more than 74% of Tether stablecoins were actually backed up by real cash reserves. This hasn’t stopped over $24 billion worth of USDT being issued to date, and the stablecoin is still involved in the largest volume of crypto market spot trading on a daily basis.

Chief technology officer of Bitfinex, Paulo Ardoini, recently took to his Twitter account to remind observers that Tether was registered and regulated under the Financial Crimes Enforcement Network, and that any suggestion that USDT represented a security was just an example of fear, doubt and uncertainty, or FUD.

Given Tether’s perceived influence in driving up the price of Bitcoin (BTC), and the extent of its everyday use by cryptocurrency traders, many fear a negative outcome on behalf of iFinex Inc, however justified, may wreak havoc on the value of BTC and the rest of the cryptocurrency market.

Updated: 1-22-2021

Tether’s Bank Deltec Says Stablecoin Is Fully Backed by Reserves

“Every tether is backed by a reserve and their reserve is more than what is in circulation,” said Gregory Pepin, Deltec Bank’s deputy CEO.

Tether Ltd.’s Bahamas-based bank, Deltec, said on Friday the company’s tether (USDT) stablecoin is fully backed by reserves, downplaying resurgent fears about the cryptocurrency’s integrity.

“Every tether is backed by a reserve and their reserve is more than what is in circulation,” Gregory Pepin, Deltec Bank deputy CEO, said on the latest episode of the “Unchained” podcast hosted by journalist Laura Shin. “We can see it firsthand, so I can confirm that.”

Tether Ltd., the company behind the tether stablecoin (which has a value linked to the U.S. dollar on a 1:1 basis), has been long accused of lacking of transparency about the coin’s backing. Indeed, a Tether lawyer said in 2019 each USDT was only about 74% backed by fiat equivalents.

USDT’s market capitalization has grown from $4 billion to an astonishing $24 billion in the past 12 months. Reserves are said by Tether on its website to include “traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

Fears about a shortage of backing resurfaced last week after a Medium post cited the discrepancy between the amount of tether issued during the nine months to September 2020 and the funds held at Bahamas-based domestic banks as evidence of a massive shortage of reserves at Tether.

“There weren’t nearly enough dollars in all the domestic banks in the Bahamas to back the tethers that were floating around in the crypto market,” the anonymously penned post stated, citing Bahamas central bank figures.

Pepin, however, refuted that claim, stating that Deltec is not a domestic bank and doesn’t have an authorized dealer license, which is needed to hold Bahamian dollars in cash and deposits.

“We cannot take domestic customers and we cannot hold domestic Bahamian dollars. So that report is actually not relevant,” Pepin told Shin. “And actually, if [the post’s author] took a little effort to go and dig a bit about the size of the Bahamian market of banking, [that person] would have found out that the entire mass of banks have around $200 billion in assets, I believe. And we are a part of that.”

Pepin also offered clarity on the bank’s recent disclosure of bitcoin (BTC) purchases for clients, which triggered rumors it was doing so on behalf of Tether. Both the bank and Tether denied the claim last week.

“We have a very competent and well-respected investment team. And as part of their portfolio education for customers, they actually did an allocation in bitcoin on behalf of those customers,” Pepin said, noting that the 50-year-old bank’s customers range from asset managers to high-net-worth individuals.

Updated: 2-5-2021

Amid Ongoing Legal Proceedings, Bitfinex Announces Tether Loan Repayment

A half-billion dollar loan has been closed out, but multiple court cases grind on.

In a short statement today, Bitfinex — the sister company to centralized stablecoin Tether — announced that it has repaid Tether an outstanding loan balance of $550 million.

This action fully closes out a larger $750 million loan from a $900 million credit line first issued in 2018 — a credit line which has been at the center of a market manipulation lawsuit in New York and a broader lawsuit from the New York Attorney General, among other legal proceedings.

“Bitfinex is happy to announce that in January it repaid the remaining balance of $550,000,000 of the outstanding revolving loan facility to Tether,” wrote Stuart Hoegner, general counsel at Bitfinex. “Bitfinex made this payment in fiat currency wired to Tether’s bank account. All interest due on the loan has been paid. The loan has now been repaid early and in full and the line of credit has been cancelled.”

While the loan is repaid, legal action surrounding the loan continues to move forward. iFinex Inc. — the parent company of both Tether and Bitfinex — is facing multiple class-action lawsuits as a result of the loan which allege that the company issued unbacked Tether that was then used to manipulate the market.

The company is also facing scrutiny from the New York Attorney General. Last month iFinex requested that a trial date be pushed back so the company could produce documents requested by Office of the Attorney General — the second such delay the company has requested.

Despite iFinex’s legal troubles not going away anytime soon, Bitfinex and Tether CTO Paolo Ardoino seemed to take a victory lap on social media, poking fun at the community of “Tether truthers” who believe the stablecoin poses systemic risk to the crypto ecosystem:

Bitfinex did not respond to a request for comment before publication.

Updated: 2-23-2021

Tether To Report Reserves And Pay $18.5M Fine After Settlement With NYAG

New York Attorney General Letitia James

New York regulators are forcing Tether to be fully transparent about its reserves, at the cost of not serving New York residents.

Bitfinex and Tether settled with the Office of the New York Attorney General in the landmark case against Tether. New York authorities alleged that Tether misrepresented the degree to which Tether (USDT) coins were backed by fiat collateral.

The settlement requires Bitfinex and Tether to pay $18.5 million for damages to the state of New York and submit to periodic reporting of their reserves.

The terms of the settlement mandate Bitfinex and Tether to report their current reserve status and budget and any transactions between the two companies, as well as provide public reports for the specific composition of their cash and non-cash reserves. The reports will need to be submitted each quarter for the next two years.

Finally, the settlement also requires Bitfinex and Tether to stop servicing customers in the state of New York.

As previously reported by Cointelegraph, the lawsuit by the New York attorney general alleged that USDT was not fully backed by reserves at certain times. Specifically, Bitfinex is alleged to have opened a line of credit with Tether to repay an $850 million shortfall from the failure of its former partner, Crypto Capital Corp.

The line of credit has since been closed, as reported by Tether and confirmed by authorities. While the documents make specific claims as to the status of Tether’s reserves in 2017 and 2018, the regulators do not seem to have any issues with Tether’s reserve status in 2021.

The settlement fine of $18.5 million is by now a very small portion of all existing USDT, which is almost $35 billion. A Tether spokesperson told Cointelegraph that the company is “pleased to have reached a settlement of legal proceedings.” They continued:

“Under the terms of the settlement, we admit no wrongdoing. The settlement amount we have agreed to pay to the Attorney General’s Office should be viewed as a measure of our desire to put this matter behind us and focus on our business. We are pleased that our customers have shown loyalty and commitment to our businesses over the past two years, while this investigation was ongoing.”

The New York attorney general’s office settled Tuesday a nearly two-year investigation into the finances and corporate practices of the companies that operates the Bitfinex cryptocurrency exchange and the stablecoin tether.

Hong Kong-based iFinex Inc., which operates the Bitfinex exchange, and Tether Ltd. agreed to pay $18.5 million to the attorney general’s office. Additionally, Tether agreed to publicly release quarterly statements detailing its reserves.

The attorney general’s office said the companies made several public misrepresentations, regarding the dollar reserves backing for tether in 2017 and a situation in 2018 when Bitfinex lost access to about $850 million of its customers’ funds that it had placed with an outside company.

When Bitfinex lost those customer funds, it borrowed money from the tether reserves to cover the loss, something it didn’t disclose publicly. That money has since been paid back, though Bitfinex is still trying to recover the original $850 million.

 

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Artist Akon Loves BTC And Says, “It’s Controlled By The People” (#GotBitcoin?)

Ledger Live Now Supports Over 1,250 Ethereum-Based ERC-20 Tokens (#GotBitcoin?)

Co-Founder Of LinkedIn Presents Crypto Rap Video: Hamilton Vs. Satoshi (#GotBitcoin?)

Crypto Insurance Market To Grow, Lloyd’s Of London And Aon To Lead (#GotBitcoin?)

No ‘AltSeason’ Until Bitcoin Breaks $20K, Says Hedge Fund Manager (#GotBitcoin?)

NSA Working To Develop Quantum-Resistant Cryptocurrency: Report (#GotBitcoin?)

Custody Provider Legacy Trust Launches Crypto Pension Plan (#GotBitcoin?)

Vaneck, SolidX To Offer Limited Bitcoin ETF For Institutions Via Exemption (#GotBitcoin?)

Russell Okung: From NFL Superstar To Bitcoin Educator In 2 Years (#GotBitcoin?)

Bitcoin Miners Made $14 Billion To Date Securing The Network (#GotBitcoin?)

Why Does Amazon Want To Hire Blockchain Experts For Its Ads Division?

Argentina’s Economy Is In A Technical Default (#GotBitcoin?)

Blockchain-Based Fractional Ownership Used To Sell High-End Art (#GotBitcoin?)

Portugal Tax Authority: Bitcoin Trading And Payments Are Tax-Free (#GotBitcoin?)

Bitcoin ‘Failed Safe Haven Test’ After 7% Drop, Peter Schiff Gloats (#GotBitcoin?)

Bitcoin Dev Reveals Multisig UI Teaser For Hardware Wallets, Full Nodes (#GotBitcoin?)

Bitcoin Price: $10K Holds For Now As 50% Of CME Futures Set To Expire (#GotBitcoin?)

Bitcoin Realized Market Cap Hits $100 Billion For The First Time (#GotBitcoin?)

Stablecoins Begin To Look Beyond The Dollar (#GotBitcoin?)

Bank Of England Governor: Libra-Like Currency Could Replace US Dollar (#GotBitcoin?)

Binance Reveals ‘Venus’ — Its Own Project To Rival Facebook’s Libra (#GotBitcoin?)

The Real Benefits Of Blockchain Are Here. They’re Being Ignored (#GotBitcoin?)

CommBank Develops Blockchain Market To Boost Biodiversity (#GotBitcoin?)

SEC Approves Blockchain Tech Startup Securitize To Record Stock Transfers (#GotBitcoin?)

SegWit Creator Introduces New Language For Bitcoin Smart Contracts (#GotBitcoin?)

You Can Now Earn Bitcoin Rewards For Postmates Purchases (#GotBitcoin?)

Bitcoin Price ‘Will Struggle’ In Big Financial Crisis, Says Investor (#GotBitcoin?)

Fidelity Charitable Received Over $100M In Crypto Donations Since 2015 (#GotBitcoin?)

Would Blockchain Better Protect User Data Than FaceApp? Experts Answer (#GotBitcoin?)

Just The Existence Of Bitcoin Impacts Monetary Policy (#GotBitcoin?)

What Are The Biggest Alleged Crypto Heists And How Much Was Stolen? (#GotBitcoin?)

IRS To Cryptocurrency Owners: Come Clean, Or Else!

Coinbase Accidentally Saves Unencrypted Passwords Of 3,420 Customers (#GotBitcoin?)

Bitcoin Is A ‘Chaos Hedge, Or Schmuck Insurance‘ (#GotBitcoin?)

Bakkt Announces September 23 Launch Of Futures And Custody

Coinbase CEO: Institutions Depositing $200-400M Into Crypto Per Week (#GotBitcoin?)

Researchers Find Monero Mining Malware That Hides From Task Manager (#GotBitcoin?)

Crypto Dusting Attack Affects Nearly 300,000 Addresses (#GotBitcoin?)

A Case For Bitcoin As Recession Hedge In A Diversified Investment Portfolio (#GotBitcoin?)

SEC Guidance Gives Ammo To Lawsuit Claiming XRP Is Unregistered Security (#GotBitcoin?)

15 Countries To Develop Crypto Transaction Tracking System: Report (#GotBitcoin?)

US Department Of Commerce Offering 6-Figure Salary To Crypto Expert (#GotBitcoin?)

Mastercard Is Building A Team To Develop Crypto, Wallet Projects (#GotBitcoin?)

Canadian Bitcoin Educator Scams The Scammer And Donates Proceeds (#GotBitcoin?)

Amazon Wants To Build A Blockchain For Ads, New Job Listing Shows (#GotBitcoin?)

Shield Bitcoin Wallets From Theft Via Time Delay (#GotBitcoin?)

Blockstream Launches Bitcoin Mining Farm With Fidelity As Early Customer (#GotBitcoin?)

Commerzbank Tests Blockchain Machine To Machine Payments With Daimler (#GotBitcoin?)

Bitcoin’s Historical Returns Look Very Attractive As Online Banks Lower Payouts On Savings Accounts (#GotBitcoin?)

Man Takes Bitcoin Miner Seller To Tribunal Over Electricity Bill And Wins (#GotBitcoin?)

Bitcoin’s Computing Power Sets Record As Over 100K New Miners Go Online (#GotBitcoin?)

Walmart Coin And Libra Perform Major Public Relations For Bitcoin (#GotBitcoin?)

Judge Says Buying Bitcoin Via Credit Card Not Necessarily A Cash Advance (#GotBitcoin?)

Poll: If You’re A Stockowner Or Crypto-Currency Holder. What Will You Do When The Recession Comes?

1 In 5 Crypto Holders Are Women, New Report Reveals (#GotBitcoin?)

Beating Bakkt, Ledgerx Is First To Launch ‘Physical’ Bitcoin Futures In Us (#GotBitcoin?)

Facebook Warns Investors That Libra Stablecoin May Never Launch (#GotBitcoin?)

Government Money Printing Is ‘Rocket Fuel’ For Bitcoin (#GotBitcoin?)

Bitcoin-Friendly Square Cash App Stock Price Up 56% In 2019 (#GotBitcoin?)

Safeway Shoppers Can Now Get Bitcoin Back As Change At 894 US Stores (#GotBitcoin?)

TD Ameritrade CEO: There’s ‘Heightened Interest Again’ With Bitcoin (#GotBitcoin?)

Venezuela Sets New Bitcoin Volume Record Thanks To 10,000,000% Inflation (#GotBitcoin?)

Newegg Adds Bitcoin Payment Option To 73 More Countries (#GotBitcoin?)

China’s Schizophrenic Relationship With Bitcoin (#GotBitcoin?)

More Companies Build Products Around Crypto Hardware Wallets (#GotBitcoin?)

Bakkt Is Scheduled To Start Testing Its Bitcoin Futures Contracts Today (#GotBitcoin?)

Bitcoin Network Now 8 Times More Powerful Than It Was At $20K Price (#GotBitcoin?)

Crypto Exchange BitMEX Under Investigation By CFTC: Bloomberg (#GotBitcoin?)

“Bitcoin An ‘Unstoppable Force,” Says US Congressman At Crypto Hearing (#GotBitcoin?)

Bitcoin Network Is Moving $3 Billion Daily, Up 210% Since April (#GotBitcoin?)

Cryptocurrency Startups Get Partial Green Light From Washington

Fundstrat’s Tom Lee: Bitcoin Pullback Is Healthy, Fewer Searches Аre Good (#GotBitcoin?)

Bitcoin Lightning Nodes Are Snatching Funds From Bad Actors (#GotBitcoin?)

The Provident Bank Now Offers Deposit Services For Crypto-Related Entities (#GotBitcoin?)

Bitcoin Could Help Stop News Censorship From Space (#GotBitcoin?)

US Sanctions On Iran Crypto Mining — Inevitable Or Impossible? (#GotBitcoin?)

US Lawmaker Reintroduces ‘Safe Harbor’ Crypto Tax Bill In Congress (#GotBitcoin?)

EU Central Bank Won’t Add Bitcoin To Reserves — Says It’s Not A Currency (#GotBitcoin?)

The Miami Dolphins Now Accept Bitcoin And Litecoin Crypt-Currency Payments (#GotBitcoin?)

Trump Bashes Bitcoin And Alt-Right Is Mad As Hell (#GotBitcoin?)

Goldman Sachs Ramps Up Development Of New Secret Crypto Project (#GotBitcoin?)

Blockchain And AI Bond, Explained (#GotBitcoin?)

Grayscale Bitcoin Trust Outperformed Indexes In First Half Of 2019 (#GotBitcoin?)

XRP Is The Worst Performing Major Crypto Of 2019 (GotBitcoin?)

Bitcoin Back Near $12K As BTC Shorters Lose $44 Million In One Morning (#GotBitcoin?)

As Deutsche Bank Axes 18K Jobs, Bitcoin Offers A ‘Plan ฿”: VanEck Exec (#GotBitcoin?)

Argentina Drives Global LocalBitcoins Volume To Highest Since November (#GotBitcoin?)

‘I Would Buy’ Bitcoin If Growth Continues — Investment Legend Mobius (#GotBitcoin?)

Lawmakers Push For New Bitcoin Rules (#GotBitcoin?)

Facebook’s Libra Is Bad For African Americans (#GotBitcoin?)

Crypto Firm Charity Announces Alliance To Support Feminine Health (#GotBitcoin?)

Canadian Startup Wants To Upgrade Millions Of ATMs To Sell Bitcoin (#GotBitcoin?)

Trump Says US ‘Should Match’ China’s Money Printing Game (#GotBitcoin?)

Casa Launches Lightning Node Mobile App For Bitcoin Newbies (#GotBitcoin?)

Bitcoin Rally Fuels Market In Crypto Derivatives (#GotBitcoin?)

World’s First Zero-Fiat ‘Bitcoin Bond’ Now Available On Bloomberg Terminal (#GotBitcoin?)

Buying Bitcoin Has Been Profitable 98.2% Of The Days Since Creation (#GotBitcoin?)

Another Crypto Exchange Receives License For Crypto Futures

From ‘Ponzi’ To ‘We’re Working On It’ — BIS Chief Reverses Stance On Crypto (#GotBitcoin?)

These Are The Cities Googling ‘Bitcoin’ As Interest Hits 17-Month High (#GotBitcoin?)

Venezuelan Explains How Bitcoin Saves His Family (#GotBitcoin?)

Quantum Computing Vs. Blockchain: Impact On Cryptography

This Fund Is Riding Bitcoin To Top (#GotBitcoin?)

Bitcoin’s Surge Leaves Smaller Digital Currencies In The Dust (#GotBitcoin?)

Bitcoin Exchange Hits $1 Trillion In Trading Volume (#GotBitcoin?)

Bitcoin Breaks $200 Billion Market Cap For The First Time In 17 Months (#GotBitcoin?)

You Can Now Make State Tax Payments In Bitcoin (#GotBitcoin?)

Religious Organizations Make Ideal Places To Mine Bitcoin (#GotBitcoin?)

Goldman Sacs And JP Morgan Chase Finally Concede To Crypto-Currencies (#GotBitcoin?)

Bitcoin Heading For Fifth Month Of Gains Despite Price Correction (#GotBitcoin?)

Breez Reveals Lightning-Powered Bitcoin Payments App For IPhone (#GotBitcoin?)

Big Four Auditing Firm PwC Releases Cryptocurrency Auditing Software (#GotBitcoin?)

Amazon-Owned Twitch Quietly Brings Back Bitcoin Payments (#GotBitcoin?)

JPMorgan Will Pilot ‘JPM Coin’ Stablecoin By End Of 2019: Report (#GotBitcoin?)

Is There A Big Short In Bitcoin? (#GotBitcoin?)

Coinbase Hit With Outage As Bitcoin Price Drops $1.8K In 15 Minutes

Samourai Wallet Releases Privacy-Enhancing CoinJoin Feature (#GotBitcoin?)

There Are Now More Than 5,000 Bitcoin ATMs Around The World (#GotBitcoin?)

You Can Now Get Bitcoin Rewards When Booking At Hotels.Com (#GotBitcoin?)

North America’s Largest Solar Bitcoin Mining Farm Coming To California (#GotBitcoin?)

Bitcoin On Track For Best Second Quarter Price Gain On Record (#GotBitcoin?)

Bitcoin Hash Rate Climbs To New Record High Boosting Network Security (#GotBitcoin?)

Bitcoin Exceeds 1Million Active Addresses While Coinbase Custodies $1.3B In Assets

Why Bitcoin’s Price Suddenly Surged Back $5K (#GotBitcoin?)

Zebpay Becomes First Exchange To Add Lightning Payments For All Users (#GotBitcoin?)

Coinbase’s New Customer Incentive: Interest Payments, With A Crypto Twist (#GotBitcoin?)

The Best Bitcoin Debit (Cashback) Cards Of 2019 (#GotBitcoin?)

Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)

Ernst & Young Introduces Tax Tool For Reporting Cryptocurrencies (#GotBitcoin?)

Recession Is Looming, or Not. Here’s How To Know (#GotBitcoin?)

How Will Bitcoin Behave During A Recession? (#GotBitcoin?)

Many U.S. Financial Officers Think a Recession Will Hit Next Year (#GotBitcoin?)

Definite Signs of An Imminent Recession (#GotBitcoin?)

What A Recession Could Mean for Women’s Unemployment (#GotBitcoin?)

Investors Run Out of Options As Bitcoin, Stocks, Bonds, Oil Cave To Recession Fears (#GotBitcoin?)

Goldman Is Looking To Reduce “Marcus” Lending Goal On Credit (Recession) Caution (#GotBitcoin?)

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