New York Shuts Down Crypto Trading Platforms For Hiding $850 Million Losses

New York state authorities are shutting down activities of two crypto trading platforms that hid losses of up to $850 million.

Both companies lied in their statements

The Attorney’s office started the investigation into the incident in 2017 for their “stablecoins” trades that were supposed to have a real-dollar value.

The revelation from the investigation shows that the crypto trading platforms were not true to their statements regarding the backing of the “tether” stablecoin. The investigation also revealed both companies made false statements about the transfer of hundreds of millions of dollars between both companies.

According to the report, both firms “covered-up massive financial losses to keep their scheme going and protect their bottom lines.”

Both firms to pay an $18.5 million fine

Letitia, the state’s Attorney General, stated that the authorities have concluded their investigation with Tether and Bitfinex, allowing them to end all trading activities with New York residents. In addition to the shutdown, the affected trading platforms are expected to pay $18.5 million as fines.

The report also stated that Tether claimed that its token has been completely supported by US dollars, but it was all a lie.

The firms hid the genuine face of the risk investors and were carrying out unregulated and unlicensed operations.

The firms have accepted to discontinued any trading activities with New York residents. They have also accepted to deliver mandatory reporting on core business functions.

On the part of Bitfinex, the company supposedly covered up over $800 million in losses incurred with Crypto Capital Corp, a Panama-based company. Bitfinex replied to liquidity reports by providing false assurances to the market and its investors about the customer funds held by Crypto capital.

The injunction against both companies was obtained by the Attorney General in April 2019. The companies are now expected to pay the fines in addition to the adherence of several transparencies and regulatory measures determined by the New York Court.