Bitfinex and Tether have been surrounded by controversy for the last few weeks regarding a cover-up of suspected loss. There has been further stir into the situation as NYAG has requested both virtual currency exchange and the Stablecoin operator to disclose the papers of a contract.
Letitia James of NYAG has requested the Bitfinex to submit the documents of financial dealings with Tether, its loan details, missing funds and its transactions with crypto capitals as per the memorandum of law on May 3rd.
Although the company has claimed they have not lost any fund instead it was deposited with a Panamanian firm, crypto capital. The fund was later held by the government authorities of the US, Portugal, and Poland.
The crypto exchange is accused of using $850 million funds received from the tether to mask the damage. The fund was supposed to be utilized as a reserve fund for USTD. This act of both firms has compelled NYAG to file a case against them. According to NYAG, both the firms have tried to deceive the investors and have attempted to manipulate the cryptocurrency market place.
Tether and Bitfinex have discharged a joint declaration after the accusation made by NYAG saying the allegation is baseless. They have also requested the Supreme Court of New York to put a stay on NYAG order, which means Bitfinex will not have to provide the documents to NYAG within the stipulated date provided by them,
According to the legal counsel of Bitfinex and Tether, Stuart Hoegner, who has been serving both the firms since 2016, has written in an affidavit Tether is presently having an account standby of 2.1 billion dollars which represents 74% of the total USTD in circulation. The remaining 26% is held by Bitfinex of which they are alleged of covering up their loss. He has further said that NYAG allegations is not serving any useful purpose but spreading misinformation in the market.
Both the companies have represented itself as a victim of NYAG interfering in the course to recover the client’s funds.
Although the injunction from NYAG has not prevented Bitfinex or Tether to operate its business normally, the case has raised considerable interest in the crypto community. But the legal counsel of the firm has confirmed tether holders does not have any risk. The website of the firm has also guaranteed the Stablecoin is 100% backed by USD.