Tether, the issuer of the USDT (+%) stablecoin, claims to have received a ransom note asking for bitcoin (BTC, +%) (currently worth about USD $22 million), lest documents be made public that could “harm the Bitcoin ecosystem.” Tether disclosed the alleged extortion attempt in a tweet Sunday.
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But there have been concerns about whether Tether had enough cash reserves to back all the tether tokens in circulation. Critics have also raised fears that tether tokens were used to manipulate bitcoin prices , a claim Tether has repeatedly denied.
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New York Attorney General Letitia James' office says it found that Tether sometimes held no reserves to back its cryptocurrency's dollar peg. It said that, from mid, the company had no access to banking and misled clients about liquidity issues. Executives at Bitfinex and Tether then allegedly engaged in a series of transactions that opened up Tether's cash reserves to Bitfinex. Tether and Bitfinex refused to admit to any wrongdoing Tuesday but said "we share the Attorney General's goal of increasing transparency.
A spokesperson for the companies wasn't immediately available when contacted by CNBC for further comment. Crypto investors have been closely watching the New York fraud probe, which has gained more interest recently in light of bitcoin's meteoric surge. There are now about The world's most valuable digital coin was already tumbling ahead of the New York attorney general's announcement. Skip Navigation.
Tether (cryptocurrency)
Last week, we sued to shut down Coinseed for its fraudulent conduct. These legal actions send a clear message that we will stand up to corporate greed whether it comes out of a traditional bank, a virtual currency trading platform, or any other type of financial institution. The announcement linked to a letter dated November 1, , which stated that tethers were fully backed by cash, at one dollar for every one tether.
As of today, Tether represents that over 34 billion tethers have been issued and are outstanding and traded in the market.
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From the beginning of its interaction with the OAG, iFinex and Tether falsely claimed that they did not allow trading activity by New Yorkers. The OAG investigation determined that to be untrue and that the companies have operated for years as unlicensed and unregulated entities, illegally trading virtual currencies in the state of New York.
In April , the OAG sought and obtained an injunction against further transfers of assets between and among Bitfinex and Tether, which are owned and controlled by the same small group of individuals. In addition, these companies must submit regular reports to the OAG to ensure compliance with this prohibition.
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Further, the companies must submit to mandatory reporting on core business functions. Specifically, both Bitfinex and Tether will need to report, on a quarterly basis, that they are properly segregating corporate and client accounts, including segregation of government-issued and virtual currency trading accounts by company executives, as well as submit to mandatory reporting regarding transfers of assets between and among Bitfinex and Tether entities.
Additionally, Tether must offer public disclosures, by category, of the assets backing tethers, including disclosure of any loans or receivables to or from affiliated entities. Bitfinex was one of the trading platforms examined in the report. Visit the Press Release Archive. The Office of Attorney General's website is provided in English. However, the "Google Translate" option may assist you in reading it in other languages. Google Translate cannot translate all types of documents, and it may not give you an exact translation all the time.
Anyone relying on information obtained from Google Translate does so at his or her own risk. The Office of Attorney General does not make any promises, assurances, or guarantees as to the accuracy of the translations provided. A copy of this disclaimer can also be found on our Disclaimer page.
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