Tether Ltd and Bitfinex will pay a fine of $18.5 million following an out-of-court settlement with the New York State Attorney General (NYAG). This agreement is the end of the judicial soap opera for the USDT and the dispersal of a potential black swan for the entire market.
The end of a judicial soap opera
The Bitfinex exchange and its sister company Tether Ltd, the originator of the stablecoin of the same name, have reached an out-of-court settlement with the New York State Attorney General's Office (NYAG) after 2 years of proceedings. As part of the settlement, both companies agreed to pay a fine of $18.5 million.
In April 2019, the NYAG filed a lawsuit accusing the Bitfinex exchange of using the reserves of its sister company Tether Ltd. to cover an $850 million loss. As a result, the Stablecoin Tether (USDT) no longer had full convertibility into dollars.
New York State Attorney General Letitia James said: "Bitfinex and Tether illegally and recklessly hedged significant financial losses to maintain their operations and protect their bottom line... Tether's assertions that its stablecoin was fully backed by dollars at all times were a lie. »
For example, Tether Ltd. has long been accused of lacking transparency about its reservations. This case was the focus of attention as it threatened the integrity of the USDT and thus represented a systemic risk for the entire market.
The Attorney General also demanded that Bitfinex and Tether cease operations in New York State. However, the loss of this market is anecdotal for both companies.
More transparency!!!!!!
As part of the agreement, Tether also volunteered to provide the NYAG office and the public with a quarterly update on USDT reserves.
Stuart Hoegner, Legal Counsel to Bitfinex, said : "We share the Attorney General's goal to increase transparency... We would disclose additional information about Tether's reserves to both the Attorney General's office and the public on a quarterly basis. »
In the settlement agreement, the NYAG office also acknowledged the recent repayment of the Bitfinex loan to Tether. In early February, the Bitfinex Exchange had stated that it had repaid its $900 million loan from its sister company.
With this out-of-court settlement, the USDT's lengthy court case is coming to an end. Bitfinex and Tether say they have provided more than 2.5 million pages of documentation to the NYAG office to close the case.
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