The total crypto market cap lost $13 billion of its value since April 24 and now stands at $171.5. The top ten currencies are all in red for the 24-hour period with Cardano (ADA) and Stellar (XLM) being the worst performers with four percent of losses each. At the time of writing, bitcoin (BTC) is trading at $5,412 on the Bitfinex daily chart, while ether (ETH) stands at $159 and Ripple’s XRP dropped further to $0.299.
Bitcoin peaked at $5,688 during the trading session on April 24 reaching its highest point this year. Bull traders, however, could not keep up the momentum and closed the day with a drop to $5,480. The red candle was the first after two consecutive winning sessions in which the most popular cryptocurrency gained four percent of value.
What caused the current market selloff could be related to the announced court order against iFinex Inc. The company behind cryptocurrency exchange Bitfinex and Tether Limited, the issuer of the USDT stablecoin, received a notice from the New York Attorney General’s office on April 24.
The news was shared on April 25 when New York Attorney General Letitia James confirmed she would be investigating both entities for “violations of New York law in connection with ongoing activities that may have defrauded New York investors that trade in virtual or “cryptocurrency.” According to the official press release, Bitfinex attempted to hide a loss of approximately $850 million of user funds, which the firm transferred to a Panama-based company called “Crypto Capital Corp.” and could not recover. Exchange executives later tried to compensate for the missing assets by accessing up to $900 million of Tether’s cash reserves compromising the claimed 1 to 1 USD backing.
In the early hours of April 26, the crypto exchange released a statement claiming that the funds, which were transferred to Crypto Capital are not lost but have been seized and safeguarded. At current, the company is looking to execute its legal rights to release the full amount.
On the same day, bitcoin began recovering and at the time of writing, it has already erased four percent of the losses registered during the previous session, trading at $5,440.
The Ethereum token dropped below $170 on April 24 and closed the session at $166 after dropping to $161 during the intraday trading.
Ether lost 7.2 percent of its value on the Bitfinex investigation news and moved down to $154, a level last seen on April 2. The short break below the $150 during the same session is causing some concerns as to the strength of the support level.
Still, the ETH/USD pair managed to recover and climbed back up to $159 in the early hours of April 26.