Cryptocurrency companies Tether and Bitfinex, have been in the eye of the storm for the past two years. The accusation leveled by a New York court had seen the companies dragged the legal mud for financial misappropriation.
The Storm Is Over
According to a media release from the Attorney General’s office, a 22-month legal battle between the New York Attorney General’s office (NYAG) vs. Bitfinex and Tether came to an end Tuesday morning.
The legal case, which bordered on whether Bitfinex and Tether attempted to cover up a financial loss of $850 million in customer and corporate investments, was put to bed.
Bitfinex had denied losing money. It cited regulatory action against Crypto Capital’s funds in Poland, Portugal, and the US as reasons for being cash-strapped. It has been actively trying to recover the funds ever since.
The settlement terms will see the accused parties part with $18.5 million in fees and Tether providing quarterly reports of its reserves for the next 24 months.
The quarterly reports are expected to be the same as those submitted to the NYAG’s office during the trial. Tether and its sister firm are also not pleading guilty to the charges. On its part, the NYAG will bring no further charges, thereby ending the case.
The case, which started in April 2019, had negatively impacted the cryptocurrency market. In less than an hour, the crypto market lost a startling $10 billion.
The settlement has been hailed by many as an end to a trying era for the crypto industry. Reports had surfaced in 2019 that Tether was issuing more digital tokens than was backed by the dollar and driving up the price of Bitcoin. Meaning, the crypto exchange was contravening the 1:1 stablecoin to dollar peg.
Speaking on the viral assumptions that originated from social media, Tether and Bitfinex’s legal representative Jason Weinstein said that there were no findings that Tether ever issued USDT stablecoins without dollar backing or tried manipulating crypto prices.
Attorney General Letitia James of the NYAG countered:
“Bitfinex and Tether recklessly and unlawfully covered massive financial losses to keep their scheme going and protect their bottom lines. Tether’s claims that US dollars fully backed its virtual currency at all times was a lie,” the AG clarified.
The AG further said that from June 1, 2017, to September 15, 2017, Tether tokens were not pegged 1:1 to the dollar.
The settlement agreement also noted that Bitfinex had repaid the $850 million loan it received from Tether and closed the credit line. The lawsuit, which is considered one of the most prolonged legal battles with US authorities, was fully put to bed after Tether and Bitfinex provided over 2.5 million documentation to back their claims.
Ripple Labs Still On The Legal Hook
US regulatory bodies have been quite active in the digital economy since cryptocurrencies started gaining notoriety in 2017. Many crypto-facing companies are receiving injunctions and subpoenas from entities like the Securities and Exchange Commission (SEC) by the day.
An ongoing legal battle between the SEC and Ripple Labs has the crypto world torn apart. A December 2020 class-action lawsuit saw the SEC alleging that Ripple Labs, its CEO Brad Garlinghouse, and co-founder Christian Larsen sold unregulated securities to the investing public.
The accused has denied the allegation stating that the XRP token is not a security hence does not fall under the SEC’s jurisdiction. The case is still in the courts and has hurt the digital payment service, with many crypto exchanges distancing themselves from the blockchain juggernaut.