Bitfinex, a popular cryptocurrency trading site, is being sued by the New York State Attorney General (NYSAG).
After a Tether
The NYSAG is after Bitfinex and its attached stablecoin, Tether (USDT) for alleged fraud.
According to a 23-page document, reports The Block, the New York office believes that traders within the United States and New York state engage in bitcoin trading among other cryptocurrencies on the platform. This goes against what the platform said back in 2018, in that it would no longer allow trading with this specific population.
The group requests any and all documentation from Bitfinex traders within New York state. These will go under examination to find any sort of legitimate activity.
Moreover, it seems that the two accused participated in “undisclosed, conflicted transactions to cover Bitfinex’s losses by transferring money out of tether reserve funds”. These transfers supposedly lead to $700 million taken from USDT reserves.
Also, Crypto Capital, a payment processor from Panama, may be working with Bitfinex as well. It seems the two spent time managing withdrawals, though there doesn’t appear to be a contract between them:
“According to documents provided to OAG by Respondents, by 2018, Bitfinex had placed over one billion dollars of co-mingled customer and corporate funds with Crypto Capital.”
Others may be participating
“As explained to OAG attorneys by Respondents’ counsel, Bitfinex and Tether have also used a number of other third party payment processors to handle client withdrawal requests,” the suit continues. Essentially, it seems that Bitfinex works with these other groups to hide the transacted money. Other groups include “various companies owned by Bitfinex/Tether executives, as well as other friends of Bitfinex.”
The Attorney General accuses Crypto Capital of working with Bitfinex because the latter had no other bank to do so. Interestingly, this story correlates with Crypto Capital’s possible theft of $851 million in crypto last October. At that time, Bitfinex struggled to honor withdrawals.