As you probably already know, major cryptocurrency exchange, Bitfinex, has been served a lawsuit by the New York State Attorney General (NYAG) Letitia James for the coverup of $850 million of missing client funds.
Also, this scandal has revealed that USDT is not backed 1:1 by the US dollar because Tether only has enough cash and securities to back up 74% of the total supply.
The NYAG investigation is ongoing and James has requested the disclosure of documents about an alleged deal made between Bitfinex and the stablecoin operator, Tether. The NYAG delivered a memorandum of law requesting these documents to Bitfinex on May 3.
Bitfinex and Tether Committed Fraudulent Acts
The NYAG’s memorandum of law calls on Bitfinex and Tether to provide them with more transparency and claims that the two entities misled their clients and investors. Explaining why the Office of the State Attorney General is requesting documents, their statement read:
“While that and other discrepancies do not change the core issues in this case […] they only heighten the OAG’s [Office of the Attorney General’s] need to obtain documents and information in a timely, organized fashion so that the OAG may understand what has taken place, and what continues to take place, at these companies.”
The document also notes that the authorities have issued a judicial order to prevent Tether and Bitfinex from further dissipating the cash reserves that are supposed to back USDT 1:1 with the US dollar. This order will remain in place until the OAG’s investigation is completed.
Moreover, the NYAG states that Bitfinex and Tether can continue to operate their businesses during the duration of this investigation, just as they have continued to do since the injunction.
Bitfinex Wants to Raise $1 Billion in an IEO
As previously reported by IIB, Bitfinex is planning to raise $1 billion by issuing their own exchange token dubbed LEO in an initial exchange offering (IEO).
This announcement of Bitfinex’s IEO comes in the midst of their investigation from US regulatory authorities and is speculated to be used to replace the missing funds which are purportedly frozen under the payment processor, Crypto Capital’s control.
Releasing some documents about the LEO token was Zhao Dong, a Bitfinex shareholder who tweeted the promotional documents on May 4:
Bitfinex Official document about the LEO token pic.twitter.com/YR5FdS4iUY
— Dong Zhao (@zhaodong1982) May 4, 2019
Per the LEO token documents, the token will reportedly be a utility token for iFinex’s trading platforms including Bitfinex, EOSfinex, and future trading platforms launched by iFinex, the parent company behind Bitfinex and Tether.
Furthermore, the document states that LEO tokens will offer holders reduced exchange fees for trading, lending, withdrawals, deposits, and derivatives.
Do you think Bitfinex and Tether should be allowed to raise money from investors and get away with what they’ve done? Or should they both be shut down indefinitely? Let us know what you think in the comment section below.
