The Bitfinex exchange house was accused of trading securities without a license in New York, but the companies involved claim that the accusations from the prosecutor are false

The exchange house Bitfinex and its subsidiary Tether, responsible for the token anchored to the dollar of the same name, labeled the accusations from New York Attorney General’s Office as “bad faith”. Both companies were accused of trading securities without complying with regulations in the State of New York.

In a public statement Bitfinex responds to accusations from Attorney General Letitia James, assuring that the documents presented in the prosecutor’s office “were written in bad faith and are plagued with false claims.” The official position of the exchange house, which is also the position of Tether, explains that the accusation made by the auditing body occurred “without a previous warning or hearing”.

Bitfinex has denied the loss of US $850 million belonging to its clients with the company Crypto Capital, as the prosecution documents claim. “We have been informed that these amounts of Crypto Capital are not lost, but they have actually been seized and safeguarded,” they explain.

The alleged loss of customer funds of Crypto Capital was announced by WSJ reporter, Paul Vigna, through his Twitter account. According to him, the reports state that Bitfinex used its mooring reserves to hide the loss of US $850 million.

“We are (and have been) actively working to exercise our rights and remedies and release those funds. Unfortunately, the New York Attorney General’s office seems to be trying to undermine those efforts to the detriment of our clients,” he said.

Bitfinex and Tether’s Response to New York Prosecutor’s Office

The crypto companies claim that the order of the New York Prosecutor’s Office constitutes an “attempt to force Bitfinex and Tether to provide certain documents and seek a certain precautionary measure.” Similarly, both companies declare that they have cooperated with the Prosecutor’s office, since they are classified as crypto companies that are on the side of regulators.

However, toward the end of their statement they indicate that both Bitfinex and Tether are financially strong companies, which will vigorously challenge this and any other fiscal action of Attorney General James.

Bitfinex and Crypto Capital

The accusation against Bitfinex, which is extended to Tether, establishes that the exchange house was operating through third parties in New York without having a license granted by the Department of Financial Services of New York that is known as BitLicense.

The investigation, conducted by the Assistants of the Prosecutor’s Office, alleges that Bitfinex crossed its funds with those of its clients through Crypto Capital so that it would cover the requirements of the US clients related to its funds. This occurred despite the fact that Bitfinex stipulated not to provide more services for natural persons in the United States since late 2017.

In this way, Crypto Capital, a Panama-based company, is listed as one of Bitfinex’s payment processors in the investigation of Attorney General James. However, in the documents the Prosecutor’s Office details that, as part of the irregularities, there is no formal contract signed by Crypto Capital and Bitfinex.

Officially, Bitfinex is based in the Virgin Islands. However, on many occasions, US regulators have shown that companies that operate on their borders must comply with their regulations, regardless of their place of residence.

By Willmen Blanco


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