- Bitfinex and Tether have settled litigation with the New York Attorney General’s (NYAG) office after nearly two years.
- The Tether (USDT) issuer stated that the NYAG found no evidence that USDT is not backed 1:1 by US dollar reserves.
The news that Bitfinex and Tether have settled the lawsuit with the NYAG is incredible bullish news for the crypto market. The lawsuit has been hovering over the Bitcoin and crypto market like a Damocles sword for 22 months now. As CNF reported, the New York AG sued iFinex, the parent company of Bitfinex and Tether back in April 2019, which caused extreme uncertainty and a crash in the market at the time.
The NYAG accused Tether of lending Bitfinex $850 million to cover a loss. The lawsuit also added more fuel to the longstanding theory that Tether created its tokens out of thin air, manipulating the Bitcoin price. If the NYAG found evidence that not all Tether (USDT) was backed 1:1 by U.S. dollar reserves, some fear this could have led to the “fall” of Tether and thus a crash of the crypto market. As a result of the settlement, Bitcoin investors should therefore now have one less major concern.
Detail about the settlement between Bitfinex, Tether and the NYAG
As per a statement from New York Attorney General Letitia James, iFinex will have to pay a fine of $18.5 million as part of the settlement. In addition, the company will be prohibited from conducting any trading activities in New York State:
These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.[…]
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.
Meanwhile, Bitfinex and Tether cite that they have not been proven to have engaged in any wrongdoing. Jason Weinstein, a partner at Steptoe & Johnson and legal counsel for Bitfinex and Tether, told The Block:
Contrary to online speculation, after two and half years there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices.
In addition, as part of the settlement, Tether committed to provide the public with a quarterly update on USDT’s reserves. Also, the settlement agreement acknowledged Bitfinex’s recent loan repayment to Tether. Just a few weeks ago, Bitfinex announced that they had repaid Tether the remaining loan balance of $550 million.