Bitfinex and Tether have been banned from operating in New York and must pay a fine of $18.5 million as part of a settlement with the New York Attorney General’s Office (NYAG), the case dates back to 2019.

In a statement on Tuesday, New York Attorney General Letitia James accused the two entities of concealing significant losses from investors. James said: “Bitfinex and Tether have illegally covered up huge financial losses in order to keep their plans going and protect their profits.”

She continued: “Tether claims that its virtual currency is fully backed by U.S. dollars at all times. This is a lie. These companies conceal the real risks faced by investors and are controlled by unlicensed trading in the darkest corners of the financial system. And unregulated individuals and entities.”

According to the statement, an investigation by the New York State Attorney General found that the two companies made false statements about the support of Tether, and Bitfinex used Tether’s funds to secretly cover up the $850 million financial loopholes of its Crypto Capital Bank in Panama.

According to the investigation, starting in 2017, Tether could not enter the banking system, and there was no reserve to support Tether (USDT) in circulation at that time. Bitfinex emphasized that it did not lose money, claiming that Crypto Capital’s funds were confiscated by the governments of Portugal, Poland and the United States.

As a result, Bitfinex and Tether are now prohibited from conducting any trading activities with New York citizens. NYAG requires the two companies to submit reports on core business functions on a regular basis. Tether must also publicly disclose assets supporting Tether by category, including disclosure of any loans or receivables between affiliated entities.

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Tether issued a statement on Tuesday, “No wrongdoing is allowed.” It believes:

The Attorney General’s Office concluded that, in essence, we can better disclose these events publicly. Contrary to online speculation, after two and a half years, it was not discovered that Tether had issued Tether that did not support or manipulate cryptocurrency prices.

What do you think of the settlement between Bitfinex and Tether and NYAG’s office? Let us know in the comments section below.

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