Bitfinex and Tether are being surrounded with a constant controversy about the alleged cover-up of a massive loss. The whole plot between the two parties has taken an interesting path as New York State Attorney General (NYAG) Letitia James has demanded Crypto Exchange Bitfinex and Stablecoin operator Tether to reveal the documents concerning the alleged deal made between them. The NYAG's memorandum of law was filed on May 3.
Previously, Crypto Exchange Bitfinex was charged for using $850 million in Tether funds to cover losses, funds should be actually held in the reserve to back the value of stablecoin USDT. This forced the NYAG's office to file a case against the Bitfinex and Tether, claiming that both the firms have faked investors and manipulated the marketplace of Cryptocurrency.
The memorandum of law asks Bitfinex to provide all the documents concerning $850 million deals, claims “that Bitfinex and Tether misled their clients and investors.” The statement further clarifies over why the Office of the State Attorney General is pushing for the said documents:
“While that and other discrepancies do not change the core issues in this case [...] they only heighten the OAG’s [Office of the Attorney General’s] need to obtain documents and information in a timely, organized fashion so that the OAG may understand what has taken place, and what continues to take place, at these companies.”
The filling consists of a section which attempts to block Bitfinex from using any of the Tether's fund which are backed by the USDT coin, asserting to have,
“craft[ed] a narrow injunction to preserve the status quo and prevent Respondents from further dissipating the cash reserves that supposedly back the tether virtual currency, pending completion of the OAG's investigation.”
The NYAG also mentioned that the current case hasn't stopped Bitfinex and Tether from continuing “to operate their businesses in the normal course, as they have continued to do since the injunction.”
As mentioned before, NYAD stated that Bitfinex is using Tether funds to cover their shortfall. Following the charges, both Bitfinex and Tether replied to NYAG's court filings in a statement saying that it as “riddled with false assertions.”
The case has gained a lot of interest in the community and investment base of the cryptocurrency, even though the price of the stablecoin has maintained its 1 USD price point, the firm is disappointed by the actions of a firm which has been known for providing a currency backed 1:1 US dollars.
SBefore a week, Lawyers claimed that Tether is only 74% backed by cash and equivalents, with the rest covered by credit lines. However, Tether tried to position this to be a win for the firm, thereby clearing the valuation of the USDT Token, various users believe that firm is misleading users for the exact backing of the coin. Also, several users have a question, can we really consider Tether to be stable.