It is huge news! According to New York Attorney General’s office, Bitfinex, one of the biggest cryptocurrency exchanges in the world, may have lost $850 million and cover that shortage using Tether, a stablecoin associated with the exchange.
After that information was brought to the light, the price of Bitcoin fell from $5,527 to $5,186 in a matter of an hour.
We thought that the cryptocurrency market had the worst behind it, and from then on, it would only go higher. We even made a chart analysis which suggested that the growth would proceed. After last night revolution, it just may not be the case anymore.
Yesterday, Letitia James, New York Attorney General, published a press release in which she explained that her office filed a court order against iFinex. Inc, the company responsible for Bitfinex and Tether (USTD). In the document, she ordered these two organizations to cease violating New York law and defrauding New York residents.
She wrote in the release:
“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.”
According to the allegation, Bitfinex sent $850 million of the customer and corporate funds to Crypto Capital Corp., which is a payment processor that is said to be holding funds from other exchanges as well, such as QuadrigaCX. Funds from Tether’s reserve were used to make up the shortfall, but customers knew about neither the loss nor Tether’s fund movements.
The price drop
Quickly after that news the market reacted. The price of Bitcoin (BTC) went down significantly in the matter of roughly an hour. Of course, other cryptocurrencies recorded declines, too.
After a while, the price picked up a little, but it is still lower than just a day ago.
Shortly after the news came out, Bitfinex published a statement on their website.
The exchange denies any of the accusations. The trading platform said in the release:
“The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million “loss” at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded.”
According to Bitfinex, the AG’s office isn’t eager to cooperate or even listen to what the exchange has to say. They claim that both Bitfinex and Tether are financially strong and don’t have any real problems with funds.
Tether had its problems at the end of last year. Another scandal could possibly end the tenure of being number one stablecoin in the industry.
We don’t know the outcome of this case, but we will update the story when something new happens.
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