Bitfinex allegedly repaid the $750 million loan that it took from Tether but this doesn’t solve the legal problems yet as we can see in our latest Tether news.
Bitfinex allegedly repaid the Tether stabelcoin issuer which was the reason behind the investigation launched by the New York Attorney General’s office. There are still many questions about the exchange’s relations with Tether but the company now claims that it has repaid the remainder of the loan. The exchange explained that it initially paid $550 million to Tether in January after having paid back $100 million in the past two years. Bitfinex took the loan in 2018 after alleging that its Crypto Capital payments processor stole $850 million.
The New York Attorney General’s office probed the loan on suspicion that Bitfinex was lending itself money to cover up the losses while Crypto Capital stands accused of money laundering. As the NYAG explained:
“In order to fill the gap, executives of Bitfinex and Tether engaged in a series of conflicted corporate transactions whereby Bitfinex gave itself access to up to $900 million of Tether’s cash reserves, which Tether for years repeatedly told investors fully backed the tether virtual currency ‘1-to-1.’”
The Bitfinex general counsel Stuart Hoegner said that the exchange had a “Short-term need for cash and Tether was prepared to lend on reasonable terms.” The New York Attorney General’s argument was that Tether is using the reserves in a way that could constitute fraud. Earlier in the investigation, Tether conceded back in March 2019 that it wasn’t backed by real US dollars but by cash equivalents and other assets and receivables.
"I don't know why you keep complaining that I embezzled funds, after all, I returned them when I didn't need them anymore!" https://t.co/3EzlYd4PHV
— Rohan Grey (@rohangrey) February 5, 2021
The loan repayment doesn’t mean that Tether and Bitfinex’s legal troubles are over. Rohan Grey, a law professor from the Willamette University College who is also the Vice-Chair of the Digital Currency Global initiative, riffed on the old crypto saying “Don’t trust, verify” and said that there’s no reason to trust that the exchange repaid the loan given the previous issues about whether Tethers were fully backed by US dollars but he did say that given the bullish state of the crypto markets, is plausible:
“However, even if repayment did occur as alleged, it would be a serious mistake to adopt an ‘all’s well that ends well’ view of what transpired.The core concern—that Tether’s assets are not fully backed—remains, and its opaque relationships with Bitfinex and Deltec remain ethically and legally problematic.”
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