Bitfinex, Tether Formally Contest US Court Case Over Alleged $850 Million Fraud

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The operator of cryptocurrency exchange Bitfinex and stablecoin Tether (USDT) is planning to vacate the court order that accuses it of an $850 million funds loss, a document confirmed on May 5.

IFinex, which received scrutiny from the New York Attorney General late last month, is now questioning the authority’s legal basis for its accusations.

Cryptocurrency markets tumbled on April 26 after the case went public, with Bitfinex alleged to have lost control of $850 million sent to a third party. The exchange, the Attorney General claims, then used USDT reserves to plug its losses.

Subsequently, lawyers from Tether confirmed preexisting rumors that its tokens did not have full reserve backing, and was in fact only 74% backed by fiat dollars and other reserves.

Having previously issued public denials of any wrongdoing, the defendants took a strongly-worded stance against the Attorney General in court.

“Bitfinex and Tether moved to vacate the ex parte April 24, 2019 Order in this case because it was issued based on incomplete or incorrect facts and the wrong legal standard,” the document reads. It continues:

“Nothing in the Attorney General’s opposition papers justifies the ex parte Order having been issued in the first place, or persisting any longer.”

Markets have since broadly shaken off the uncertainty, with USDT retaining parity with USD. During previous controversy involving Tether in October 2018, that peg had been considerably more volatile, at one point falling to just 87 cents.

IFinex also took issue with the manner in which the accusations arose, specifically with regard to upending bitcoin’s winning streak which had persisted since April.

“This rally was halted by this case, which resulted in an approximate loss of $10 billion across dozens of cryptocurrencies within one hour of the April 24, 2019 Order becoming public,” it added.

Cryptocurrency market tracker CoinMarketCap has since removed Bitfinex’s bitcoin price from its calculations, as it is trading around $300 over BTC’s current market rate.