The New York Attorney General (NYAG) Letitia James has issued Bitfinex and Tether with an $18.5 million penalty after both parties settled an ongoing lawsuit.
Tether is a stablecoin that is pegged to the US Dollar, it has been under scrutiny for more than four years as a result of rumours that suggested it wasn’t entirely backed by USD, and that it had a role in manipulating the Bitcoin price in the 2017 bull market.
However, as previously mentioned to Coin Rivet, Bitfinex and Tether CTO Paolo Ardoino dismissed those rumours, adding that there was evidence to the contrary.
— Bitfinex (@bitfinex) February 23, 2021
The settlement with NYAG includes a stipulation that restricts Bitfinex and Tether from offering services to New York residents, while it also states that the company has to become more transparent by submitting audits.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James.
“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”
The price of Bitcoin immediately rose from a low of $45,800 to $49,000, quelling fears over continuation of a correction that has spanned over the past 48-hours.
For more news, guides and cryptocurrency analysis, click here.