Bitfinex Under Fire From New York Regulators
29 Aprile 2019 - 6:46PM
ADVFN Crypto NewsWire
Bitcoin Global News (BGN)
April 29, 2019 -- ADVFN Crypto NewsWire -- Murky ties and
money movement through through fiat, currency, shares, Tether and
debt continue to drag Bitfinex and Tether into predicaments with
regulators and raise concerns for their users. The two companies
are owned and operated by the larger iFinex, which was used as the
the target for the New York Attorney General’s Office in the U.S.
to bring the wide range of issues at hand to light.
“New York state has led the way in
requiring virtual currency businesses to operate according to the
law. And we will continue to stand-up for investors and seek
justice on their behalf when misled or cheated by any of these
companies.” - Letitia James New York Attorney General
Attorney General Letitia James
obtained a court order against iFinex ordering them to cease
violating New York law and defrauding New York residents. The most
simple and blatant offense being that they companies have not made
their customers aware of movements made with their money holdings,
and that customers have not been made aware of changes to their
policies when made. Just two months previously it was noted by a
twitter user that Tether had removed the specific language in their
policies that the coin is backed directly by USD dollars, and
instead can now be backed in other equivalent forms of
value.
$850 Million Liquidity
Problems
For most people, simply grasping
the concept of cryptocurrencies is difficult enough. On top of
this, Tether is a stablecoin. It was created as a 1 to 1 USD backed
cryptocurrency, meaning that the issuing company would always have
the equivalent amount of USD ready to be withdrawn by customers.
However, this has clearly not been the case as the New York
Attorney General's Office has brought to light.
“Documents provided to OAG
demonstrate that by mid-2018. Bitfinex was having extreme
difficulty honoring its clients’ requests to withdraw their money
from the trading platform because Crypto Capital, which held all or
almost all of Bitfinex·s funds, refused to process customer
withdrawal requests and refused or was unable to return any funds
to Bitfinex.” - Attorney General Order Document
The New York Attorney General’s
office alleged that Bitfinex has entirely lost $850 million. The
note banking transactions that highlight it was attempted to be
covered up by tapping into Tether reserves. The company was then
forced to take out a loan to cover the new spread. Regardless of
whether users will be able to have their funds withdrawn, the
outlook is not positive for any companies involved.
“In an in-person meeting on February 21, 2019. counsel for Bittinex
and Tether explained that, in order to make up for the apparent
loss of $851 million to Crypto Capital, Bitfinex and Tether were in
the process of contemplating a transaction that would permit
Bitfinex to draw upon Tether’s cash reserves on an as-needed
basis.” - Attorney General Order Document
By: BGN Editorial Staff
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