Bitfinex repays tether
Bitcoin,  Regulation

Bitfinex repays $750M Tether loan, but lawsuits remain

The cryptocurrency exchange paid off the remaining $550 million it borrowed from its sister company after being robbed—a loan that led to fraud and market manipulation lawsuits

The lawsuits continue, but the $750 million loan stablecoin issuer Tether gave its sister company Bitfinex in 2018 has been repaid.

Bitfinex repaid the outstanding balance of $550 million in fiat currency, with interest, the exchange said in a very terse statement on Feb. 5.

In a tweet, Stuart Hoegner, the general counsel of both Bitfinex and Tether, added that the credit facility has been cancelled.

Tether extended a $900 million line of credit after $880 million was plundered from the exchange, allegedly by Crypto Capital Corp. and Reginald Fowler. The companies are still seeking to recover much of that missing money from authorities in the U.S., Poland, Portugal, and the U.K. 

Tether’s undisclosed loan led New York State Attorney General Letitia James to sue the companies and their parent iFinex for fraud, conflict of interest, and violation of New York’s securities laws in civil court for failing to make clear that Tether’s USDt stablecoin was no longer backed one-to-one by U.S. dollars.

The Attorney General’s lawsuit has dragged on very slowly, in large part because the defendants challenged James’ jurisdiction repeatedly, noting that Bitfinex did not accept New York residents—or Americans—as clients.

Tether and Bitfinex are facing a series of class-action civil suits arguing that they manipulated the bitcoin market to the extent that they are responsible for causing  2018’s crypto winter, and that tether is not backed one-to-one by dollars. It seeks $1.4 trillion in damages. 

These cases are based on a paper, “Is Bitcoin Really Un-Tethered?” by John Griffin of the University of Texas at Austin and Amin Shams of Ohio State University. That paper has been called “bogus” by iFinex, and Tether branded the allegations “frivolous.”

Fowler’s criminal case is ongoing, with the most recent news being that his lawyers withdrew from the case in November.

 You May Also Like

Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.