Bitfinex Lost $850 Million, Allegedly Covered Its Loss With Tether Funds

The latest cryptocurrency news show that the New York Attorney General’s office recently alleged that the crypto exchange Bitfinex lost $850 million and has used funds from affiliated stablecoin operator Tether to cover the shortfall.

According to an official announcement which is in the crypto currency news lately, the Attorney General Letitia James and her office obtained a court filing alleging that iFinex Inc. (which is the operator of Bitfinex) as well as Tether Limited and their associated entities were all in violation of the New York law, going in connection with the activities that may have defrauded the New York-based crypto investors. All of this is linked to the fact that Bitfinex lost $850 million.

According to her:

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.
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The filings which show that Bitfinex lost $850 million, as reported on many best cryptocurrency news sites, show that Bitfinex never revealed the loss to its investors – with executives of the exchange and Tether being engaged in a series of conflicting corporate transactions where Bitfinex got access to up to $900 million of Tether’s cash reserves.

The reports also show that Bitfinex took not less than $700 million from Tether’s reserves and used the funds to hide its losses and its inability to handle the clients’ withdrawals. The court has reportedly ordered the operators of all the companies to immediately cease the dissipation of the US dollars that back tether tokens – and produce investigation-related information and documents.

The news that Bitfinex lost $850 million went in the altcoin news and were re-shared by analysts on Twitter too, where one crypto entrepreneur named Alistair Milne noted that Bitfinex will pay a fair interest rate on what is – in effect – a loan. On top of this, 60 million shares of Bitfinex stock were traded as collateral.