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Bitfinex and Tether Agrees $18.5M Settlement Fee with NYAG
Bitfinex and Tether have settled the legal dispute with the New York Attorney General Office (NYAG) that began in 2019. As part of the settlement, the crypto firms have agreed to pay $18.5 million to the New York state regulator.
End To A Protracted Legal Dispute
The New York Attorney General Office revealed the settlement agreement in a statement released today. The lengthy report highlighted the entire legal dispute process that began in 2019. In April 2019, the NYAG office charged Bitfinex for allegedly using Tether funds to cover $850 million lost to payment processor Crypto Capital. It further alleged that the lost funds had resulted in withdrawal payments for Bitfinex customers in 2018.
The lawsuit was part of an investigation that discovered that Tether had from 2017 falsely claimed that the dollar fully backed its stablecoin USDT. The investigation had alluded that Tether was lying about their cash reserves for issuing stablecoins.
Tether and Bitfinex had denied these accusations and stated that government authorities in Portugal and Poland had seized the $850 million funds lost to Crypto Capital. However, New York Attorney General Letitia James revealed in the report that the claims that the U.S dollar fully backed USDT at all times were a lie.
In the settlement agreement with the NYAG, Bitfinex and Tether will stop providing services in New York. Also, Tether agreed to give a quarterly public update on its USDT reserves and even details about its operations.
What Next for Tether and Bitfinex?
The settlement with the NYAG represents a significant relief to Bitfinex and Tether, which had faced scrutiny in recent months. Bitfinex had initially taken the first step by repaying the $850 million loan obtained from Tether and provided over 2 million documentation pages to the NYAG office to settle the case.
Nevertheless, the statements from NYAG are still damning to the stablecoin and not necessarily a dismissal of the accusations. Tether has lost a bit of its market share to rival USDC in the past year, and this is mainly due to the transparency shown by Circle, the company issuing USDC.
Tether will have to adopt a transparent model that will offer assurance to the crypto community and regulators about its dollar reserves. At the time of publication, Tether is the third-largest cryptocurrency with a marketcap of $34.7 billion.