Bitfinex to be Charged With Covering $850M Losses

New York State Attorney General believes that Bitfinex hid the losses of $850M with help of stablecoins, borrowed from the affilate Tether
26 April 2019   420

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

New York State Attorney General Leticia James reported on receiving a court order against the 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.

In a statement, the attorney 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.

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.

Leticia James

Attorney General, New York State

According to prosecutors, Bitfinex give $ 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 provided 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.

OAG has reason to believe that Bitfinex still allows New York-based individual investors to deposit, trade, and withdraw virtual currencies, and engage in other transactions, on the Bitfinex trading platform.

Brian Whitehurst

Assistant Attorney General, State of New York

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 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.

Representatives of the exchange reacted 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.

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

On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers.

Bitfinex Team

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

Circle to Move Exchange Operations Offshore

The decision was made due to regulatory uncertainty in the United States and now the majority of users will be served by Bermudas unit
23 July 2019   87

The majority of Poloniex users from outside the US will now be serviced by a new unit of this cryptocurrency exchange, which opens in Bermuda, the platform operator, Circle, said on Monday, July 22.

The company said the decision was made due to regulatory uncertainty in the United States. The work of already existing divisions of companies in the United States themselves, as well as in Ireland, the United Kingdom and Hong Kong, will continue.

Representatives of Circle note the advanced and extremely clear legislation in Bermuda, which opens up opportunities for the rapid development of innovations in the field of cryptocurrencies, and for business promotion.

It is based on the Digital Asset Business Act (DABA), adopted in 2018, which provides full control and supervision of financial services related to cryptocurrencies, including the issuance of digital assets, the purchase and sale of coins, exchange transactions, and custodial services.

According to the aforementioned company law to operate in Bermuda, it is necessary to obtain a license, and as Circle reports, today it has become the first large cryptocurrency company in the world to obtain such a Class F (full) license.

As a result, we’ll be able to deliver new innovations, including asset listings and trading services, to global customers while also staying true to our commitment to compliant, well-supervised operations and customer protections.

Circle Team

In the commentary, CoinDesk Circle CEO Jeremy Allaire said that over 70% of Poloniex’s entire customer base accounted for overseas users.

Europe and Asia are both pretty significant markets for us in particular. USDC stablecoin is particularly popular with institutional Asian investors. The lack of regulatory frameworks significantly limits what can be offered to individuals and businesses in the U.S.

Jeremy Allaire

CEO, Circle

It was precisely the lack of clear regulation that forced Circle to dismiss about 30 employees in May, and as Jeremy Allair has now stated, the company plans to hire approximately the same number of new people over the next two years, who, however, will get other roles.

The project to establish a new international operations hub for our market, exchange and wallet services, was a major project. It took a long time working with the Bermuda government and the Bermuda Monetary Authority.

Jeremy Allaire

CEO, Circle

The head of Circle also said that a greater variety of assets will become available to international clients of Poloniex, and the exchange can expand the range of financial services that it cannot offer in the United States.

What kind of products and services in question, Allair did not specify, adding only that users can expect more opportunities for revenue. At the same time, he mentioned the existing stacking services for Cosmos and Stellar.