Recently, the New York Attorney General’s office offered more details about his decision to investigate Bitfinex and Tether in a court presentation published by the state Supreme Court, in an attempt to gain jurisdiction and continue.
To be accurate, the document was published on Thursday, December 12, and is dated December 4. In that document, the NYAG alleges that the two firms had been gradually depleting the reserves that support Tether’s stablecoin, also known as USDT.
A very important aspect is that the new report expands accusations that the crypto Exchange masked a $850 million hole in its finances by lending funds that support Tether without informing investors.
Thus, in a brief writing, the attorney general explained:
“Step by step they had dissipated the cash backing ties: first by moving from real cash to $ 625 million in an inaccessible Crypto Capital account; and then replacing even that questionable source of support with nothing more than a $ 625 million Bitfinex promissory note. ”
In addition to adding that, said promissory note “seemed unlikely to be fulfilled,” given the poor financial condition of the company.
Recall that it was in October 2018 when Tether intended to be “fully backed” by dollar reserves, and then end up admitting that stablecoin only has a 74% support.
Thus, Bitfinex and Tether’s lawyers recently offered a response to the document, stating that the NYAG has no authority to investigate the companies because “the bonds are not securities or merchandise.”
Also, in the publication in response, the company alleges that the report “offers a very deceptive factual presentation. It describes the fully guaranteed loan in commercially reasonable terms as nothing more than a Bitfinex promissory note “which seemed unlikely to be repaid,” conveniently omitting the fact that Bitfinex paid $100 million of that loan months ago, earlier than expected and with interests”.
On the other hand, the NYAG also resurfaced allegations that Bitfinex’s “LEO” token, sold to investors to restore depleted crypto exchange finances, was an illegal “security.” To which, it was answered that US buyers were prohibited from buying LEO tokens; Therefore, he assures that “any criticism of our‘ tactics ’in this case… are described as unsubstantiated.”
In this way, Attorney General James said Bitfinex and Tether are trying to dismiss a NYAG lawsuit; but the reality is that, such a demand does not exist, only an investigation, which, in any case, could lead to a demand in the future.
Thus, the Attorney General alleged that it has been more than eight months since the order was issued by the court that obliges Bitfinex and Tether to provide documents that are important for the investigation.