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The current legal battle began when Attorney General James alleged that Bitfinex, parent company iFinex and Tether Limited, and their associated entities violated New York law in connection with activities that may have defrauded New York-based crypto investors. The NYAG said that Bitfinex borrowed $850 million from Tether to cover a loss that it never disclosed to investors.
In October, the United States Attorney’s Office for the Southern District of New York indicted the principal of controversial Panama-based shadow payment processor Crypto Capital on three criminal counts. Crypto Capital had, in Bitfinex’s own words, “processed certain funds for and on behalf of Bitfinex for several years.” However, Bitfinex has argued it was itself a victim of fraud when Crypto Capital either refused to or was unable to make available $850 million of Bitfinex’s deposits.
