Exchange platforms pay a fine of $ 18.5 million for deceptive and fraudulent practices.
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Cryptocurrency exchanges Bitfinex and Tether have fined New York State $ 18.5 million to end legal action accusing them of deceptive and fraudulent practices.
The two companies will also have to end their activities with New Yorkers, New York State Attorney Letitia James said in a statement on Tuesday.
“Bitfinex and Tether have dangerously and illegally covered up huge financial losses in order to continue their schemes and preserve their balance sheets,” said Ms. James.
Tether is the origin of “stablecoin” (“stable currency”) tether, an asset whose value is supposed to be pegged to that of a fiat currency, in this case the US dollar.
However, according to the New York State Attorney, “Tether’s claims that its virtual currency was permanently backed by US dollars was a lie.”
In conducting the investigation, Ms James’ services notably discovered that in mid-2017, Tether did not have access to any banking services in the world and therefore had no cash reserves.
The Bitfinex platform also found itself in a situation of insolvency, says the prosecutor, and tried to hide the loss in 2018 of $ 850 million deposited in the Panamanian entity Crypto Capital.
Bitfinex would then have claimed, wrongly, that the funds were saved.
“The reality was that Bitfinex did not know the exact location of all of its client funds held by Crytpo Capital and was therefore unable to provide such guarantees,” accuses Ms. James.
In a joint statement released on Tuesday, the two companies take note of the agreement with New York State, but do not recognize any wrongdoing.
They claim that a loan from Tether to Bitfinex, when the latter was having difficulty accessing the $ 850 million held in Panama, was not illegal.
“The loan was made to ensure continuity for Bitfinex customers. It has since been repaid before maturity and in full, including interest, ”the companies wrote.
The two companies nevertheless say they share with Ms. James “the objective of increased transparency” about cryptocurrencies.
These virtual currencies are frequently accused of functioning in an opaque manner. On Monday, US Treasury Secretary Janet Yellen attacked bitcoin again, regretting that the most famous cryptocurrency is often used “for illicit finance”.
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