{"id":103179,"date":"2019-04-26T13:39:28","date_gmt":"2019-04-26T20:39:28","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=103179"},"modified":"2019-11-07T06:02:50","modified_gmt":"2019-11-07T06:02:50","slug":"bitfinex-tethers-cover-850-million-lost-funds","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/bitfinex-tethers-cover-850-million-lost-funds\/","title":{"rendered":"Tether price falters following iFinex investigation, bitcoin moved from Bitfinex"},"content":{"rendered":"

Following a probe<\/a> which revealed the apparent loss of $850 million in funds, the attorney general of the State of New York obtained a court order<\/a> against iFinex Inc., which operates\u00a0Bitfinex<\/a> and owns Tether Ltd., ordering them to cease further dissipation of the US dollar assets which back the USDT<\/a>\u00a0stablecoin.<\/p>\n

A $850 Million Cover Up<\/h2>\n

In a press release<\/a> the Attorney General revealed that in 2018 iFinex Inc. handed almost a billion dollars without any written contract or assurance over to Crypto Capital Corp., a Panamanian payment processor. The idea was that Crypto Capital was going to handle Bitfinex customers-withdrawal requests. Later on, the Panamanian payment processor lost control of the funds and could no longer process the orders. After acknowledging this, iFinex Inc. failed to inform its investors of the potential losses and engaged in unlawful behavior.<\/p>\n

\u201cOur investigation has determined that the operators of the \u2018Bitfinex\u2019 trading platform, who also control the \u2018tether\u2019 virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds,\u201d said Attorney General James.<\/p><\/blockquote>\n

The report disclosed that executives of Bitfinex and Tether dealt with the liquidity shortage in a series of transactions whereby the cryptocurrency exchange gave itself access to up to $900 million of Tether\u2019s cash reserves that were used to back the stablecoin. As stated in the press release:<\/p>\n

\u201cBitfinex has already taken at least $700 million from Tether\u2019s reserves. \u00a0Those transactions\u2014which also have not been disclosed to investors\u2014treat Tether\u2019s cash reserves as Bitfinex\u2019s corporate slush fund, and are being used to hide Bitfinex\u2019s massive, undisclosed losses and inability to handle customer withdrawals. \u00a0The Office\u2019s filings further detail how the companies obfuscated the extent and timing of these corporate transactions during the Office\u2019s investigation.\u201d<\/p><\/blockquote>\n

More alarmingly, the transcript revealed:<\/p>\n

\u201cBTC could tank to below 1k if we don\u2019t act quickly.\u201d<\/p><\/blockquote>\n

When unprocessed withdrawal requests peaked, Bitfinex stated in a Medium post<\/a> on Oct. 15, 2018, that:<\/p>\n

\u201cAll cryptocurrency and fiat withdrawals are and have been processing as usual without the slightest interference.\u201d<\/p><\/blockquote>\n

\n

Fiat deposit update – October 15th, 2018. https:\/\/t.co\/F8o2ltVCN4<\/a> pic.twitter.com\/ukE9JsRB0j<\/a><\/p>\n

— Bitfinex (@bitfinex) October 15, 2018<\/a><\/p><\/blockquote>\n