The New York State Prosecutor’s Office brought charges against Bitfinex to the cryptocurrency exchange that, having suffered a loss of $ 850 million, it concealed this fact, using the funds of its affiliated issuer steyblokoin Tether to cover the damage. The exchange itself categorically denies these allegations, but the news still caused a sharp decline in the price of Bitcoin.

On receiving a court order against the company iFinex Inc., which is the operator of Bitfinex and Tether, according to which they must stop violating the laws of New York and mislead residents of the state, on Thursday, April 25, said New York Prosecutor General Leticia James.

In a statement, the prosecutor said that during the investigation it was possible to establish that iFinex was involved in the operation to conceal the alleged loss of $ 850 million owned both by the company and its clients. It is assumed that because of this, the exchange in the past had problems with the withdrawal of funds.

“The state of New York led a movement that obliges virtual currency companies to conduct their activities within the framework of the law. We will continue to protect investors and seek justice in their interests when we discover cases of fraud on the part of any of these companies, ” said Leticia James.

According to prosecutors, Bitfinex donated $ 850 million of corporate and client funds to a payment service provider from Panama, Crypto Capital Corp. The latter, presumably, holds assets and other representatives of the cryptocurrency sphere, including the bankrupt QuadrigaCX exchange.

Tether’s reserves were said to have been used to fill the gap, but this was not reported to customers. At the moment, the prosecutor's office says, it has been established that Tether borrowed at least $ 700 million for these purposes.

It is noteworthy that even last year Bitfinex stated that the services of the exchange would not be available for residents of New York.

Assistant Attorney General of the State of New York Brian Whitehurst took part in the preparation of the suit. According to him, the Bitfinex check was initiated in 2018.

“The Attorney General’s Office has reason to believe that Bitfinex still allows individual investors from New York to deposit, trade and withdraw funds in virtual currencies, as well as participate in other activities on its platform,” Whitehurst said.

According to the court order, iFinex managers of various levels, as well as agents, employees, representatives and other affiliated persons are obliged to stop accessing, borrow and in any other way claim the funds held in Tether reserves, and also cannot make any changes. in documents relating to these events.

At the same time, the document emphasizes that this decision does not mean that the US authorities intend to prevent further trading on Bitfinex and redemption of USDT tokens.

Earlier, representatives of Bitfinex and Tether told the prosecutor's office that as a reason for the retention of funds, Crypto Capital Corp. called their confiscation by the authorities of Portugal, Poland and the United States. However, according to published documents, Bitfinex does not believe in this version.

Bitfinex Statement

Representatives of the exchange reacted to the charges of the authorities of the state of New York, stating that the court order was issued without any warning or preliminary discussions with the company.

Bitfinex Respond to New York Attorney General's Actions https://t.co/snxHU2yeb5

– Bitfinex (@bitfinex) April 26, 2019

According to Bitfinex, the documents contain false claims, including the loss of $ 850 million.

“We were informed that these funds are not lost, but confiscated and under the control of the authorities. We make active efforts to return these funds. Unfortunately, the New York State Attorney General’s Office seems to be deliberately undermining these efforts, which has a negative effect on our clients, ”the exchange said.

Also in the statement said that Bitfinex and Tether are in a healthy financial position and intend to challenge the court order.

Anyway, against the background of this news, the price of Bitcoin sharply went down, dropping on a number of stock exchanges below $ 5,100. At the time of publication on Friday morning, the weighted average BTC rate was $ 5290.

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