“Our investigation has determined that the operators of the Bitfinex trading platform, who also control the tether virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds,” Ms. James said.
Court documents suggest Betfinex, which the tether coin was traded on, did not disclose how it no longer had access to over $850 million in funds that it allegedly handed over to a Panamanian entity. Tether and Betfinex are accused of engaging in a series of conflicted transactions that gave Bitfinex access to up to $900 million of Tether’s cash reserves.
Bitfinex has allegedly taken at least $700 million from Tether’s reserve. These transactions were not disclosed to investors, the attorney general claims. Ms. James alleges that Tether’s cash reserves served as a corporate slush fund for Bitfinex to hide massive, undisclosed losses.
Tether allegedly told investors it fully backed its cryptocurrency one-to-one in U.S. dollars.
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