By Bitfinex is one of the most famed cryptocurrency exchange. The firm was all over the news when it was accused of hiding an $850 million loss in client and corporate cash from its payment processor Crypto Capital, by the New York attorney general’s office. There has been a legal case going on since then between Bitfinex’s parent company iFinex and the NYAG office. The firm had borrowed $700 million from their sister company Tether, the team behind the stable coin USDT.
The company has announced on Tuesday, via a post on their website, that it has paid a $100 million of the total $700 million loan to the stablecoin operator. As per the announcement “Bitfinex made this payment in fiat wired to Tether’s bank account.”The post further added that this was a payment made well before due date:
“This amount was not yet due to be paid to Tether under the facility, but Bitfinex has made the prepayment based upon its financial position at the end of the second quarter of 2019.”
The post concluded mentioning:
“Also on July 1st, Bitfinex fully prepaid all interest accrued under the loan facility to Tether up to the end of day on June 30, 2019, also in fiat.”
Bitfinex allegedly hid the loss in their books
According to the white paper the exchange claims that their partnership with payment processor Crypto Capital was established in 2015 but their joint venture was disrupted because of a “U.S correspondent bank” and, later, in 2018 Crypto Capital presented to the exchange that the funds in their keeping were partially seized by government bodies in the U.S, Poland, and Portugal. The funds were however expected to be released shortly. Bitfinex, however, believes that “Crypto Capital might fail to return the funds held there.”
In order to make up for the loss Bitfinex engaged in a series of transactions with Tether, it’s sister company, to obtain an amount of $700 million to cover up for the losses. All of this was not disclosed to the investors until the NY attorney general accused Bitfinex and its affiliate Tether Ltd. of covering up the $850 million loss. Tether is one of the worlds most traded cryptocurrency because of its close to dollar value and stability. The acquisition raised many doubts. The money is believed to be frozen in multiple accounts controlled by Crypto Capital according to Bitfinex’s statement at the New York Attorney General’s office
Bitfinex on the verge of winning
Parent company iFinex and some other involved parties are amidst a legal fight with the NYAG office over the $850 million cover-ups. The alleged parties are on the verge of winning the case as they have argued that the New York Supreme Court does not have proper jurisdiction to charge them, and also that the supreme court does not have personal or subject matter jurisdiction and cannot be appealed to. This comes from the fact that both the companies do not operate in the state of New York and the investors in question were not in the state as well.
The NYAG’s office has until July 8 to file the opposition and iFinex and its affiliated companies will be able to file their own response by July 22. The hearing of the motion to dismiss the case is scheduled for July 29.
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