For the time being, though, we invite you to use the services of any one of a dozen global exchanges to acquire or dispose of Tethers for either USD or other cryptocurrencies. Falling far short of a full audit, the report does not disclose the names or locations of banks. “We plan to release regular financial statements and are working with journalists who can review our finances as wel[l],” Torossian says in a tweet. Meanwhile, customers continue to complain that they are unable to get cash off of the exchange. Many Bitfinex customers accept the offer, having already watched BFX tokens drop far below $1. Crypto Capital then either lost, stole, or absconded with $850 million. Realcoin is built on a Bitcoin second-layer protocol called Mastercoin, now Omni. (Offshore Leaks Database). (We have seen snapshots of bank account balances at certain points in time, but these are not full audits.). Launching tether (or anything) on Litecoin requires no approval or corporation from me. “New York state has led the way in requiring virtual currency businesses to operate according to the law. May 21, 2019 — Bitfinex files a motion to dismiss the proceeding brought by the NYAG on the grounds that Bitfinex/Tether do not do business in NY, the Martin Act does not apply to its business, and the Martin Act cannot be used to compel a foreign corporation to produce documents stored overseas. Bitfinex is not a direct customer of Wells Fargo, but rather a customer of four Taiwan-based banks that use Wells Fargo as an intermediate to facilitate wire transfers. (Omni Blog, archive), "Tether will be issuing USDT on Omni on Litecoin "Using @Tether_to on Litecoin makes a lot of sense! A Flint assault case led to a courtroom showdown over what branch of government has the authority to place a suspect awaiting trial on tether. Today, there are several stablecoins to choose from. An earlier Bitfinex blog post confirms the move. Bitfinex and Tether also seek an immediate stay of the NYAG’s document demands. Suddenly, Tether is including assets other than traditional currency in its reserves. February 26, 2019 — Tether admits, for the first time that it is operating a fractional reserve and that tethers are no longer backed by cash alone. The incident would be unprecedented. Pierce was one of the founding members of the Mastercoin Foundation before resigning in July 2014. Click the link we sent to , or click here to log in. The news follows regulatory crackdowns in the U.S. (The previous month, the U.S. Securities and Exchange Commission issued an investigative report that deemed that tokens issued by the DAO—an investor-directed fund built on top of Ethereum that crashed spectacularly in June 2016—were securities.). December 31, 2017 — Tether has issued roughly $1.4 billion USDT to date. Stablecoin issuer Tether and Bitfinex, a prominent crypto exchange and its parent company, have today settled with New York courts on a long-running case that saw the latter alleged Tether’s questionable reserves. The deadline for documents to be presented was December 2020 however the NY AG requested an extension until January 15th 2021 which was granted. Bitfinex and Tether agree to pay over $18.5 million in a fine that effectively shut the case for good. In return, customers receive an I.O.U. Tether & @Bitfinex have reached a settlement with @NewYorkStateAG.After 2.5 years and 2.5M pages of info shared, we admit to no wrongdoing and will pay US$18.5M to resolve this matter. Bitfinex CEO J.L. Such exchanges and other qualified corporate customers can contact Tether directly to arrange for creation and redemption. April 26, 2019 — In a response to to the NY Attorney General’s allegations, Bitfinex says the $850 million has not been lost, but rather “seized and safeguarded.” Meanwhile, according to CoinDesk, Zhao Dong, a Bitfinex shareholder, claims that Bitfinex CFO Giancarlo Devasini told him that the exchange just needs a few weeks to unfreeze the funds. He founded Realcoin along with Mastercoin CTO Craig Sellars and ad-industry entrepreneur Reeve Collins. Further, Bitfinex appears to be banking through the Bank of Communications under “Prosperity Revenue Merchandising,” a shell company created in June 5, 2018. And Bitfinex transfers $382 million from Bitfinex’s account at Noble Bank into Tether’s account at Noble Bank. February 2018 — an ex-NFL owner named Reginald Fowler registers a company called Global Trading Solutions LLC. Tether initiates a hard fork to prevent those funds from being spent. The NYAG has until July 8 to file a response. Mt. 1/3 — Tether (@Tether_to) February 23, 2021 Friedman conducts its verification of Tether’s assets that evening. Please. So 1 USD₮ is always equivalent to 1 USD.”. September 8, 2014 — Tether Limited registers in Hong Kong. Sadly, however, we cannot create or redeem tether for any U.S.-based customers at this time.”, From now until December 2018, tether purchases and redemptions can be made only from Bitfinex. Further, the letter contained two notable caveats: it was provided “without liability, however arising, on the part of” the bank, its shareholders, directors, employees or officers; and the letter is “solely based on the information currently in our possession.”. A footnote added to the blog post on April 5, 2017, makes a correction: “Ledger Labs has not been engaged to perform a financial audit of Bitfinex. He is required to give up his passport. Gox exchange. I certainly hope Tether kept up they’re end of the bargain…. This audit, as we are to learn, never happens. This would again wreak havoc on depositors as their loan value goes up and their collateral value drops likely causing cascading liquidations. Likely because they don't have the cash (e.g., real buyers) to…, People are asking what means. (CoinDesk). When in initial discussions with Ledger Labs in August 2016, we had initially understood that they could offer this service to us.” The exchange goes on to say that it is in the process of engaging a third-party accounting firm to audit its balance sheet. van der Velde says in a blog post (archive). The actual documents are not made public. But again, these are attestations, not the full audit Tether has been promising for months. June 21, 2017 —The Omni foundation and Charlie Lee announce that tether will soon be issued on the Omni layer of Litecoin, but apparently it never panned out, according to Lee. More troubling, the issuance of tethers correlates with the rapid run up in price of bitcoin from April to December 2017 when bitcoin peaked at nearly $20,000. The letter states that GTS AG is being denied banking services in the U.S., Europe, and elsewhere “as a result of certain AML and financial crimes investigations” by the FBI and cooperative international law enforcements and/or regulatory agencies.”. The case began in April 2019, when the Attorney General’s office said Bitfinex had lost access to close to $1 billion in customer funds, and borrowed from Tether’s reserves. He goes on to set up bank accounts under the company’s name at HSBC. You can read about the incident here but it seems to me that Tether is clearly being a bit dodgy. In a relentless series of tweets, he accuses Bitfinex of minting tethers out of thin air to pay off debts. And in its motion to vacate, Morgan Lewis argues that the NYAG has no jurisdiction over Tether or Bitfinex’s actions. There was finally a new development in the long delayed Digfinex/iFinex/Bitfinex/Tether NYAG case. What follows is a more detailed and up-to-date version. In April 2019 Attorney General Letitia James filed a lawsuit against iFinex ( Bitfinex - a cryptocurrency exchange) claiming they used Tether ( a stablecoin created by Bitfinex) to cover up a loss of $850 million dollars. July 8, 2019 — The NYAG has filed its response. Balance confirmation at 2018-10-31 attached. The primary function of Tether the company is as the issuer of a virtual currency also called “tether,” a so-called “stablecoin,” a term used to describe a virtual currency that is always supposed to have the same real-dollar value. December 16, 2017 — The price of bitcoin reaches an all-time high of nearly $20,000, marking the end of a spectacular run-up and bitcoin’s biggest bubble to date. Margin pairs include BTC/USDT and ETH/USDT. (Chapter 8 of David Gerard’s book “Attack of the 50-Foot Blockchain” offers an in-depth explanation of the hack.). It was Jan. 15, 2015.). And Bitfinex doesn’t share a transaction record to show it actually received the recovered funds. “After these redemptions, no BFX tokens will remain outstanding; they will all be destroyed.”. The New York State Supreme Court heard the appeal from Bitfinex and unanimously decided to send them back to trial, dismissed their motion to dismiss, and reaffirmed that they need to supply the ordered documents. If you are an investigator or a reporter who has benefited from this work—or just another obsessed Bitfinex follower—please consider making a donation via Patreon. In an audio, Potter admits the lawsuit was frivolous, stating the company was only hoping to “buy time.”. “We simply could not ignore the increasing level of requests for access to trade on Bitfinex from a wider cohort than our traditional customer base,” J.L. Those trying to register for a new account are asked for a mysterious referral code but no referral code seems to exist. The cryptocurrency exchange is run by the triad: Chief Strategy Officer Phil Potter, CEO Jan Ludovicus van der Velde and CFO Giancarlo Devasini. In order to fill the gap, Bitfinex dipped into Tether’s reserves for hundreds of millions of dollars. Previously, Bitfinex was relying on Amazon cloud servers. April 3, 2017 — In a blog post (archive), Bitfinex announces plans to redeem any outstanding BFX tokens. December, 18, 2018 — A Bloomberg reporter says that he has seen Tether bank statements from accounts at Puerto Rico’s Noble Bank and the Bank of Montreal taken over four separate months. The exchange does not specify who those critics are but the obvious target is Bitfinex’ed, the cynical blogger who continues to accuse Bitfinex of manipulating markets and printing more tether than it can redeem. NYAG Restricts Bitfinex’s Activity Last year, James and the New York Attorney General’s office accused iFinex of losing $850 million of user deposits. July 22, 2019 — iFinex files court docs arguing once again that Bitfinex/Tether are not doing any business in New York and tether is not a security. In our case, USDT coin price is pegged to the current price of USD, hence the name. Lewitinn: Dr. Roubini, always a ray of sunshine, of course. He is linked to Crypto Capital’s $850 million in missing funds. October 16, 2018 — Tether appears to be holding reserves at Deltec Bank in the Bahamas. This paper claims the Tether was printed to manipulate the cryptocurrency markets by pumping the price of Bitcoin. May 8, 2019 — iFinex has a new plan to raise $1 billion: a token sale. It might be possible to reach a mutually agreeable arrangement in exchange for an enormous bug bounty.”. In an audio, Bitfinex CSO Phil Potter tries to calm customers by telling them that Bitfinex effectively deals with this sort of thing by setting up shell accounts and tricking banks. May 22, 2015 — Bitfinex is hit with its first hack. May 3, 2019 — The NYAG files an opposition to Bitfinex’s motion to vacate. January 16, 2019 — Bitfinex opens a data center in Switzerland, according to Handelszeitung. Effective almost immediately, U.S. citizens are no longer able to trade Ethereum-based ERC20 tokens, commonly associated with initial coin offerings. Tether is a criminal enterprise, and a bunch of whales and insiders are manipulating the price of bitcoins and other shitcoins day in and day out. FSS is not an accounting firm. January 31, 2018 — The 2017 bitcoin bubble has burst. Parole releases are usually processed early in the morning so the parolee may leave the facility at or shortly after 8:00 A.M . Markets Jan. 16, 2021 Tether has strongly implied that its USDT stablecoin is not backed by Bitcoin, following unclear statements from its banking partner Deltec. If iFinex did in fact access Tether funds and use them for any purpose other than printing Tether, there is no way they could honor the 1:1 conversion rate. (As it turns out, the DoJ froze these accounts, so the money became inaccessible.). Change ), You are commenting using your Facebook account. Another side effect of the pandemic affecting local communities is a backlog of court cases as many mid-Michigan counties haven’t had a jury trial in more than a year. The judge holds that the Martin Act “does not provide a roving mandate to regulate commercial activity.” Bitfinex and Tether still have to handover documents that the NYAG requested in its November 2018 investigative subpoena. June 25, 2018 — Bolstering suspicions that tether is being used to prop up the price of bitcoin, researchers John Griffin and Amin Shams at the University of Austin, Texas, release a paper titled “Is Bitcoin Really Un-Tethered?” The two write: “Using algorithms to analyze the blockchain data, we find that purchases with tether are timed following market downturns and result in sizable increases in bitcoin prices.”. It would certainly leave a bad taste in retail investors mouths. A timeline of events reveals a full picture of the controversy surrounding Tether and Bitfinex. This would cause a major panic and a flood of people out of Tether (likely dropping the price and breaking the 1 dollar peg) and into other cryptocurrencies and/or other stablecoins. July 9, 2014 — Brock Pierce, Bitcoin Foundation director and former Disney child actor, launches Realcoin, a dollar-backed stablecoin. An org chart from NY AG court filings is here.). Two members of parliament in the Netherlands lodge questions for the finance minister after Dutch news site Follow The Money first disclosed the relationship on Feb. 14. And in 1996, Devasini was caught pirating and selling a substantial volume of Microsoft Software. Bitfinex Tether Court Cases CoinFlash Disclosure The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards … ), October 6, 2018 — According to a report in The Block, Bitfinex appears to be banking at HSBC—a bank previously fined $1.9 billion in 2012 for money laundering—under the shell account “Global Trading Solutions.” (We find out later that the shell was registered by Arizona businessman Reginald Fowler. The plaintiffs initially claimed damages of up to $1.4 trillion. That means, there should be a corresponding $1.9 billion tucked away in one or more bank accounts somewhere. (My blog), *Update Feb. 20, 2021 — an earlier version of this article said Bitfinex listed tether in Feb. 25, 2015. August 7, 2017 — In a  blog post (archive), Bitfinex announces that over the next 90 days, it will gradually discontinue services to its U.S. customers. December 1, 2015 — Tether issues 500,000 USDT, bringing the total supply to 950,000. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. A press release lists Bitfinex as a “partner.” In explaining the name change, project co-founder Reeve Collins tells CoinDesk the firm wanted to avoid association with altcoins. In response, Bitfinex moves its crypto funds from an omnibus account to multisignature wallets protected by BitGo. According to the exchange, if any of the stolen bitcoins are recovered, any excess of funds after all BFX tokens have been redeemed will be distributed to RRT token holders. April 10, 2017 — A pseudonymous character known as “Bitfinex’ed” debuts online. If the documents obtained by the NY AG show that Tether only has half of the reserves they claim, the real value of Tether would be 50 cents. On April 26, 2019 — after the OAG revealed in court documents that approximately $850 million had gone missing and that Bitfinex and Tether had been misleading their clients — the company issued a false statement that “we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded.” ), “Until we are able to migrate to the new platform, the purchase or sale of Tether will not be possible directly through tether.to. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies. It should be noted that I have yet to find the reason the $850 million was given to Crypto Capital in the first place. The attestation has a mysterious squiggly signature at the bottom with no name attached to it. @Omni_Layerhttps://t.co/s4BTj7YAIM. To Tethers credit they have previously issued a letter from their new bank, Deltec, proving their reserve balance. But at least one customer, Coinbase, got a better deal after threatening to sue, multiple sources told me. Further, there appears to be a conflict of interest. The docket number is also known as the case number. November 7, 2017 — Leaked documents dubbed “The Paradise Papers” reveal Bitfinex and Tether are run by the same individuals. That is a fact. A financial audit is key to knowing whether Bitfinex was even solvent at the time of the hack. in the form of BFX tokens, valued at $1 each. These individuals had past dealings. MORE FROM FORBES Bitfinex And Tether Win Stay In $900 Million New York Supreme Court Case By Michael del Castillo Grounds for the stay were rooted in … January 27, 2018 — Tether parts ways with accounting firm Friedman LLP. Up until July 2020, Tether has used legal maneuvers to defer the NY AG’s document requests. This lawsuit is attacking the very legitimacy of Tether, the number #3 ranked cryptocurrency by market cap. The exchange announces a 36% haircut across the board for its customers. For your security, we need to re-authenticate you. The September 17th hearing was for an appeal issued by iFinex claiming the case was outside the NY AG jurisdiction because Bitfinex does not operate in New York. The exchange claims it lost 1,500 bitcoin (worth $400,000 at the time) when its hot wallets were breached. May 2, 2019 — The U.S. Government wants Fowler held without bail due to flight risk. A critical look reveals there’s only a tiny bit of cash left. iFinex has told investors that their Tether will always be redeemable for U.S. December 6, 2017 — The CFTC subpoenas Bitfinex and Tether, Bloomberg reports. February 20, 2018 — Dutch bank ING confirms Bitfinex has an account there. May 13, 2019 — Attorneys for the NYAG and iFinex failed to come to a consensus on what Tether should be allowed to do with its holdings. (It is worth noting that there is no public record of anyone having redeemed their USDT for dollars at any point before this either. Additionally, if someone is holding Tether there is a good chance they would try to sell it for another stable coin like USDC. ( Log Out /  Up until now, Tether and Bitfinex insisted the two operations were separate, though they were widely suspected to be the same. Bitfinex is now left to shuffle money between a series of banks in other countries without telling its customers where it is keeping its reserves. If they own Bitcoin and want to sell some because they think the price of Bitcoin may drop, Tether can be used to “lock in” your funds and escape the volatility of Bitcoin or other cryptocurrencies. The preliminary injunction is limited to 90 days, and Tether is allowed to use its reserves to pay its employees. As of May 2021, there are 58 billion tethers in circulation.) I will review the document below. He issues an order requiring the companies produce only documents relevant to the limited issue of whether there is personal jurisdiction over the companies in New York but staying the document order in all other respects. 5W promptly issues a press release stating that an “audit” from Friedman LLP is forthcoming. One large U.S. customer reportedly didn’t get the full haircut. The bank was run by Daniel Barrs who has been indicted for failure to follow anti-money laundering laws. In a nutshell, this means that none of the victims of the August 2016 Bitfinex hack got back any of their original funds—they were all compensated with BFX tokens, RRT tokens and USDT. His travel is restricted to parts of New York and Arizona. One Redditor even reported the price dropping to $0.30. (My blog), May 13, 2021 — Tether publishes a breakdown of the assets behind tethers. Currently, Tether is ranked number #3 with a market cap of 21 billion dollars. May 23, 2018 — Phil Potter steps down from his role as Bitfinex chief strategy officer. And then in December 2017, the CFTC subpoenaed both Tether and Bitfinex. We are pleased to be able to confirm that Tether has an account with Deltec Bank & Trust Limited https://t.co/LSn64soUsC . It is important to understand what is at stake with Tether. June 27, 2018 — Several Bitfinex customers report delayed and rejected wire deposits. “Today marks an important step in Tether’s journey, as we launch a redesigned platform allowing for the verification of new customers and direct redemption of Tether to fiat.” All accounts require a minimal issuance and redemption of $100,000 USD or 100,000 USDT. February 25, 2019 — In a blog post (archive), Bitfinex claims the U.S. government has located 27.7 BTC (worth about $100,000 at this time) taken from Bitfinex in the August 2016 hack and returned the funds to Bitfinex. Docket for In re Tether and Bitfinex Crypto Asset Litigation, 1:19-cv-09236 — Brought to you by the RECAP Initiative and Free Law Project, a non-profit dedicated to creating high quality open legal information. February 19, 2021, 7:13 AM PST Skeptics question stablecoin’s role in the surge of Bitcoin Bitfinex, Tether are embroiled in a dispute with New York Questions about the influence of Tether … We plan to release regular financial statements and are working with journalists who can review our finances as wel. (See here for a complete list of documents associated with the lawsuit.). Bitfinex does not officially say this, but customers also can no longer make fiat withdrawals of less than $10,000 either. At this point, the number of USDT in circulation is 55 million, and BTC’s price has begun a steep ascent that will continue to the end of the year. iFinex then accessed Tether reserve funds to cover up this $850 million dollar loss. March 28, 2018 — Bitfinex weighs a move to Switzerland. Gox CEO Mark Karpeles admitted in court to operating a “Willy Bot.” An academic paper titled “The Willy Report” shows how the bots were responsible for much of bitcoin’s 2013 price rise. Bitfinex says it will absorb the losses. April 11, 2019 — Reginald Fowler, an ex NFL minority owner, and Ravid Yosef, who lives in Los Angeles and Tel Aviv, are indicted in the U.S. for charges related to bank fraud. “We’ve had banking hiccups in the past, we’ve just always been able to route around it or deal with it, open up new accounts, or what have you…shift to a new corporate entity, lots of cat and mouse tricks.”. Bitfinex, the crypto exchange closely linked to Tether, claims the money exists, but has yet to provide an official audit to support those claims. Bitfinex has denied the charges. Bitfinex never reveals the full details of the breach. April 24, 2019 — The New York Attorney General has been investigating Tether and Bitfinex for Martin Act violation. “The bottom line is an audit cannot be obtained,” Stuart Hoegner, Bitfinex and Tether’s general counsel, tells Bloomberg. Back in April, as CryptoPotato reported, the New York Attorney General’s office started an investigation into iFinex, the parent company of both Bitfinex and Tether. The cryptocurrency market may be in trouble if the stablecoin goes bust. What is odd here is that the U.S. Department of Justice hasn’t issued any statement about recovered bitcoin. Per the terms of the settlement, Tether and Bitfinex are required to post quarterly transparency reports—something they have never done before. From 2014 to 2018, Bitfinex placed over $1 billion with Crypto Capital because it was unable to find a reputable bank to work with it. Around this time, Bitfinex begins to rely increasingly upon Crypto Capital Corp, a Panamanian shadow bank, to shuffle funds around the globe—but it does not make this clear to customers. April 17, 2017 — Following a notice about wire delays, Bitfinex announces (archive) it has been shut off by its four main Taiwanese banks: Hwatai Commercial Bank, KGI Bank, First Commercial Bank, and Taishin Bank. ( Log Out /  These cascading liquidations would cause a downward price action spiral. However, he thinks the injunction is “amorphous and endless.” He gives the two parties a week to work out a compromise and submit new proposals for what the scope of the injunction should be. In order to fill the gap, executives of Bitfinex and Tether engaged in a series of conflicted corporate transactions whereby Bitfinex gave itself access to up to $900 million of Tether’s cash reserves, which Tether for years repeatedly told investors fully backed the tether virtual currency “1-to-1.”. In the case of tethers, one tether is … * (Bitfinex blog. Former Mt. December 4, 2017 — Bitfinex threatens legal action against its critics, according to Bitcoin Magazine. The Supreme Court agreed to hear a major Second Amendment dispute that could settle whether the Constitution protects a right to carry guns in public. Why do crypto exchanges shut down during a sell-off? October 13, 2016 — Bitfinex announces (archive) that its largest BFX token holders have agreed to exchange over 20 million BFX tokens for equity shares of iFinex, the exchange’s parent company. It means diamond hands, someone who holds a position despite risks. The change is also updated in Tether’s legal section. Also on this day, Bitfinex enables margin trading on tether. It’s a one-pager consisting of two silly pie charts. August 2, 2016 —Bitfinex claims it has been hacked again when 119,756 BTC, worth $72 million at the time, vanish. “Coinbase, got a better deal after threatening to sue, multiple sources told me,” said NYT’s Nathaniel Popper. After that, you get 1/4 of an RRT per BFX token converted. (I don’t know this for sure, but my guess is that Noble’s custodial bank, Bank of New York Mellon, likely told Noble to end its relationship with Bitfinex. No journalist takes the bait. Tether (USDT) Price Prediction for 2021 and 2025 Tether is a so-called stablecoin, meaning that its price is artificially maintained on the level of value of some other real-life asset. November 1, 2018 — Tether officially announces (archive) that it is banking with Deltec and provides an attestation letter from the Bahamian bank that the account holds $1.8 billion, enough to cover the amount of tether in circulation at the time. I say collateral value may drop because if Tether were to collapse you can bet on a market wide pullback. January 12, 2018 — After a month of being closed to new registrations, Bitfinex announces it is reopening its doors, but now requires new customers to deposit $10,000 in fiat or crypto before they can trade. Tether awaits clarification on the ongoing case against the New York Attorney General Cryptos | 1/15/2021 8:30:50 PM GMT Tether (USDT) has been subject of … December 31, 2016 — In 2016, Tether issued 6 million USDT, six times what it issued the prior year. In the affidavit, Hoegner admits that $2.8 billion worth of tethers are only 74% backed. If 21 billion Tether try to flood into USDC in a short time period this could then cause the USDC $1.00 peg to break towards the upside. September 28, 2017 — Friedman LLP issues a report alleging that Tether’s U.S. dollar balances ($443 million) match the amount of tethers in circulation at the time. October 14, 2018 — Amid concerns over Tether’s solvency and the company’s ability to establish banking relationships, tether’s peg slips again, this time to $0.92, according to CoinMarketCap, which aggregates prices from major exchanges. August 17, 2016 — Bitfinex announces it is engaging Ledger Labs, a blockchain forensic firm founded by Ethereum creator Vitalik Buterin, to investigate its recent breach.

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