In a blog post published on July 2, 2019, cryptocurrency exchange Bitfinex announced that it had repaid $100 million of the outstanding loan amount to closely affiliated stablecoin firm Tether (USDT).
Keeping the Record Clean
Bitfinex, one of the largest cryptocurrency exchanges in the world by reported trading volume has repaid $100 million to closely-held stablecoin issuing firm Tether. Reportedly, the payment was made entirely in fiat currency and comprised of all accrued interest up to the end of June 2019.
The blog post reads in part:
“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.”
According to legal filings by the New York Attorney General (NYAG) Office, the Taiwan-based exchange had borrowed some $700 million from Tether earlier in the year through a line of credit.
The exchange reportedly borrowed the sum to cover an $850 million hole in its cash reserves which resulted after its payment processor, Crypto Capital, had its bank accounts frozen by law authorities in three separate nations.
A Controversial Affair
As previously reported by BTCManager, in April 2019, the NYAG Office accused Bitfinex and Tether of colluding to cover almost $850 million worth of business loss with client funds.
At the time, NYAG representative Letitia James announced that she had obtained a court order against iFinex Inc. – the Hong Kong-based parent company of both Bitfinex and Tether – to stop it from operating beyond the boundaries of New York law and defrauding the city’s cryptocurrency investors.
In response, the two firms maintained that although they shared a few executives at top-level management, they were both separate entities and that accusing them of mishandling clients’ funds to cover business losses was in “bad faith.”
However, despite the companies’ claims, doubts rekindled among USDT holders about the legitimacy of the so-called “king of stablecoin,” which is supposedly pegged at a rate of 1:1 to USD.
Meanwhile, iFinex Inc. has filed a motion to dismiss the NYAG’s accusations on grounds that it has neither the jurisdiction power nor sufficient evidence to back up its claims. The NYAG representatives have until July 8, 2019, to file their opposition.
That said, looking back, it can be stated that the whole fiasco didn’t particularly hurt Bitfinex’s productivity within the global cryptocurrency ecosystem. This was evident from the exchange’s recently concluded initial exchange offering (IEO) which raised a staggering $1 billion within ten days from investors across the globe.
Only time will tell what ensues in the legal battle between Bitfinex and the NYAG Office.