Bitfinex and Tether settled with the New York Attorney General’s Office in a landmark lawsuit against Tether. The New York authorities believed that Tether had misinterpreted the degree to which Tether (USDT) coins were supported by fiat collateral.
The deal includes Bitfinex and Tether to pay $18.5 million for restitution to the State of New York and to report their reserves on a monthly basis. The provisions of the arbitration mandate Bitfinex and Tether have to report their existing reserve status and budget and all transfers between the two entities, as well as to include public information on the precise composition of their cash and non-cash balances. The findings would have to be sent on a quarterly basis for the next two years.
Finally, the settlement also allows Bitfinex and Tether to avoid handling consumers in the state of New York.
As previously stated by Cointelegraph, the New York Attorney General’s complaint argued that USDT has not been sufficiently supported by reserves at some occasions. Specifically, Bitfinex is alleged to have opened a line of credit with Tether to repay a $850 million deficit owing to the loss of its former partner, Crypto Capital Corp. Since then, the line of credit has been closed, as stated by Tether and verified by the authorities. Although the documents make clear statements as to the state of Tether’s reserves in 2017 and 2018, the regulators do not seem to have any concerns with Tether’s reserve status in 2021.
The $18.5 million settlement fine is currently a relatively limited fraction of all total USDT, which is nearly $35 billion. A Tether representative told Cointelegraph that the organization was “pleased to have reached a settlement of legal proceedings.”
“Under the terms of the settlement, we admit no wrongdoing. The settlement amount we have agreed to pay to the Attorney General’s Office should be viewed as a measure of our desire to put this matter behind us and focus on our business. We are pleased that our customers have shown loyalty and commitment to our businesses over the past two years, while this investigation was ongoing.”