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The New York attorney general's office claimed that the Bitfinex cryptography center had lost $ 850 million and then used the funds of the affiliated telefax operator, Tether, to secretly cover the shortfall.
According to a press release on Thursday, NYAG Letitia James announced that she had obtained a court order against iFinex Inc., which operates both Bitfinex and Tether, ordering them to stop violating the New York law and to defraud his residents.
James said that an investigation by his department had revealed that "iFinex" had been engaged in a camouflage operation to conceal the apparent loss of $ 850 million in client and corporate funds. co-mixed enterprises ", adding:
"New York State has led the way by requiring virtual money businesses to operate in accordance with the law. And we will continue to defend investors and seek justice on their behalf when they are misled or deceived by any of these companies. "
According to the statement, Bitfinex has sent $ 850 million of client and corporate funds to Crypto Capital Corp., a payment processor purporting to hold funds from other exchanges, such as QuadrigaCX. The Tether Reserve funds were used to make up the shortfall, but neither the loss nor the cash flow of Tether was disclosed to the clients.
Up to now, 700 million dollars would have been transferred.
According to a file attributed to Deputy Attorney General Brian Whitehurts, the investigation began in 2018 and appears to have been motivated by the fact that, despite claims to the contrary, "the OAG has reason to believe that Bitfinex still allows individual investors based in New York to deposit, exchange and withdraw virtual currencies. and engage in other transactions. on the Bitfinex trading platform. "
Under the court order, directors, officers, agents, agents, employees, contractors, badignees or any other related person must cease to access Tether dollars resources, to lend them or to badert their rights.
Similarly, people affiliated with iFinex should not tamper with any documents, including records, describing these actions.
This action comes a few months after the GA's office released the results of its investigation on encryption exchange, focusing on a group including Bitfinex.
The attention to Tether reserves is remarkable, given the lengthy review of the company and its stable US dollar. Critics have claimed that the chip, with its market capitalization of more than $ 2 billion, was actually not supported by sufficient funds as its operators claim. The inability to obtain an appropriate audit, as previously promised, further exacerbated these suspicions and, in March, Tether revealed that the reserves on which the USDT is based may not be entirely composed of Fiat money.
Image of New York Attorney General Letitia James via Shutterstock
The order of the full court of NY AG is below:
2019.04.24_signed_order by CoinDesk on Scribd
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