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. Stablecoins, specifically, are virtual currencies that are always supposed to have the same real-dollar value. In the case of Tether, the company represented that each of its stablecoins were backed one-to-one by 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.