In what is a landmark case against two leading crypto firms, authorities in New York have settled with Bitfinex and Tether and have agreed to accept the payment of a fine of $18.5 million while also mandating the crypto firms to submit periodic reports of their reserves so as to ensure more transparency. The settlement would also see the firms and their entities “cease any further trading activity with New Yorkers.”
The case, which started two year ago, had seen regulators in New York alleged that “Bitfinex used Tether’s funds to secretly cover $850 million lost to payment processor Crypto Capital,” while also accusing “Tether of falsifying the degree to which its stablecoins were backed by fiat collateral.”
While Bitfinex and Tether have admitted to no wrongdoing, they, however, henceforth have to report any transaction between the two companies, and also provide details of their cash and non-cash reserves to the public. This report will need to be submitted in each quarter of the next two years.
Lawyer to Bitfinex and Tether, Jason Weinstein, says that the findings made by the authorities were only limited to certain disclosures. And that “contrary to online speculation, there was no finding that Tether ever issued tethers [USDT] without backing, or to manipulate crypto prices.”
Letitia James, New York’s Attorney General, said that “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. 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.”