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NY AG’s $850M Probe of Bitfinex, Tether Ends in an $18.5M Settlement

CryptoWhale
CryptoWhale
The New York Attorney General’s office (NYAG) has settled with Bitfinex over a 22-month inquiry into whether the cryptocurrency exchange sought to cover up the loss of $850 million in customer and corporate funds held by a payment processor.
In a statement released from Attorney General James, she confirms my suspicions that Tether was indeed deceiving clients by printing unbacked dollars, and covering up massive losses.
According to NY AG’s statement this morning:
  • Tether had no access to banking
  • held no reserves
  • wasn’t backed by the dollar
  • and covered up massive losses.
Over the last 48 hours, Bitcoin’s price has plunged 26%, and had over $350B wiped from its market cap.
The largest single day drop in Bitcoin’s history coming right when Tether is confirmed to be a fraud. Not a coincidence.
Immediately after the settlement, Tether puts out a false statement claiming that NYAG found “no finding that Tether issued without backing or to impact prices”, and “we admit to no wrongdoings”
Misleading/Propaganda Tweets from Tether
Misleading/Propaganda Tweets from Tether
This tweet from Tether is misleading because in the statement from NY AG, it clearly recognizes their extensive fraud operation.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James.
“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.“
CryptoWhale
Lots of misinformation from Tether supporters has flooded social media regarding the recent settlement.

Many saying Tether "won" and is confirmed "legit"

Ignore all of these people. They either didn't read the NYAG report, or are intentionally spreading misinformation. https://t.co/a6FPNWNH9v
What's next for Tether?
Tether isn’t off the hook. Despite many Tether defenders rallying that Tether is “confirmed to be legit”, the NY AG report clearly says otherwise. This settlement means Letitia James will no longer deal with this lawsuit, and presumably, another agency will take over.
The terms of the settlement mandate Bitfinex and Tether to report their current reserve status and budget and any transactions between the two companies, as well as provide public reports for the specific composition of their cash and non-cash reserves. The reports will need to be submitted each quarter for the next two years.
I predict more powerful agencies like SEC and DOJ to open probes into Tether and Bitfinex in the coming weeks or months, and play a consequential role in taking them down.
I will be following future cases very closely, and keeping everyone up to date on any updates about Tether, which is quickly growing to becoming one of the largest Ponzi schemes ever.
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CryptoWhale
CryptoWhale @cryptowhale

Financial Analyst | Contrarian Investor providing in-depth Crypto + Stock research. Non-Biased/Non-Emotional Trading.

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