New York State Attorney General Accuses Bitfinex of Concealing $850 Million in Loss of Tether

The well-known stable currency, Tether, is in trouble again. The New York State Attorney General announced on Thursday that the cryptocurrency exchange Bitfinex was suspected of concealing huge losses for customers, involving $850 million. According to a 23-page legal filing, Bitfinex raided the reserves of a so-called stablecoin called Tether—a digital currency purportedly backed one-to-one by U.S. dollars—in order to pay out customers demanding withdrawals from the exchange.

New York State Attorney General Letitia James pointed out in the document that Bitfinex had to deposit more than $1 billion in client assets into Crypto Capital because it could not find a custodian bank. However, Bitfinex has never entered into any contract or agreement with the other party and has not disclosed the funds to the customer.

Bitfinex responded on the official website, bluntly saying that the Attorney General’s court documents were maliciously written, full of false statements, including the so-called $850 million in losses. The exchange said that the funds were not lost and were properly protected. The statement also claims that Bitfinex and Tether are financially sound and promise to jointly challenge all actions from the New York State Attorney General’s Office.

After this news came out, according to CoinMarketCap, as of 5 PM GMT+8, Tether fell 1.23% to $0.99. In general, the price of TEDA should be $1, because the publisher says each currency is equal to $1. As for other cryptocurrencies such as Bitcoin and Ethereum, they fell by 2.8% and 4.8% respectively.