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New York’s Attorney General (AG) Letitia James has filed an order to the state Supreme Court, saying that the large cryptocurrency exchange Bitfinex and stable coin Tether engaged in a cover-up after shedding about USD 850 million of consumer and company funds (Bitfinex claims it will fight back).

James’ court order particularly names each Bitfinex and Tether, in addition to the alternate’s operator, the Hong Kong-based iFinex. Additionally, Tether is owned and operated by the same small group of executives and employees who operate Bitfinex.

Large cryptocurrency exchange Bitfinex and stable coin Tether engaged in a cover-up after shedding about USD 850 million of consumer and company funds

The AG’s office claims that Bitfinex “gave itself access to up to USD 900 million of Tether’s cash reserves,” and “no longer has access to over USD 850 million {dollars} of co-mingled client and corporate funds that it handed over, without any written contract or assurance” to Crypto Capital, an organization primarily based in Panama.

Per an official AG release, James said, “Our investigation has determined that [Bitfinex has] engaged in a cover-up to hide the apparent loss of USD 850 million {dollars} of co-mingled client and corporate funds.”

Tether’s operators have claimed the token is backed by money reserves, and initially pegged it 1:1 with the USD. Till just lately, Tether operators said that every token was backed by USD 1, however, earlier this year modified this to incorporate loans made to affiliated corporations.

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The AG has been looking into a number of main exchanges with offices in New York since April last year – analyzing points as numerous as trading volume figures, security protocols and insider trading.

James and her staff have alleged the operator has “treated Tether’s cash reserves as Bitfinex’s corporate slush fund,” and is “hiding” Bitfinex’s “massive, undisclosed losses and inability to handle customer withdrawals.”

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