New York’s Attorney General Accuses Bitfinex of Performing Illicit Transactions With Tether Funds

The New York Attorney General’s office accused the owners of the cryptocurrency exchange Bitfinex of using Tether funds to cover a loss of $850 million. The information was released by NYAG Letitia James in a press release issued on Thursday. Bitcoin (BTC) and the crypto market reacted negatively to this situation.

Bitfinex Investigated After Allegedly Performing Illicit Transactions

NYAG Letitia James informed that she obtained a court order against iFinex Inc, the company that operates Bitfinex and Tether (USDT). They have been ordered to cease violating New York law and defrauding residents in the state.

As per the investigation conducted by her department, they determined that iFinex has been hiding the loss of $850 million of corporate and client funds.

On the mater, James explained:

“New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

New York state is known for having one of the hardest crypto regulations around the world. Just a few companies were granted the so-popular BitLicense.

Bitfinex sent $850 million in funds to Crypto Capital Corp. This firm holds funds from other cryptocurrency companies in the space as well. One of these firms is QuadrigaCX, which has been involved in some controversies after the death of the owner of the platform in December 2018.

It is worth mentioning that funds form Tether (USDT) were also used to make up this shortfall. Nonetheless, these movements were not disclosed to customers that rely on the stablecoin USDT. The report says that $700 million have been transferred.

As reported by CoinDesk, a filing attributed to assistant Attorney General Brian Whitehurst, the probe began back in 2018. This probe was driven because OAG believes that Bitfinex allows individuals located in New York to deposit, trade and withdraw virtual currencies on the Bitfinex exchange.

According to the crypto enthusiast on Twitter @soleil_dusoir9, ETH outflows from Bitfinex are up 2296% in the last 24 hours.

The market has also been heavily affected because of this situation. In the last 24 hours, only 10 of the top 100 virtual currencies are operating positively. Bitcoin has fallen almost 4 percent and it is now being traded around $5,270.

Tether has also lost its pair and is being traded 2% down close to $0.98 per USDT.

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