The long-running legal drama finally found a solution on February 23, when the New York City Attorney’s Office announced that it had reached an agreement with the Bitfinex cryptocurrency exchange after a 22-month investigation into whether the company was trying to hide an estimated $ 850. Million losses due to errors. manufacturing. Information on the extent to which fiat Tether (USDT) reserves are supported.
Under the terms of the announced settlement, which now marks the end of the investigation launched by NYAG in the first quarter of 2019, Bitfinex and Tether will pay the government agency a fixed sum of $ 18.5 million, but there will be no need to acknowledge this. Something wrong. At the same time, the agreement clearly states that Bitfinex and Tether can no longer serve customers in New York State from now on.
Additionally, over the next 24 months, Bitfinex and Tether will be required to submit quarterly reports to NYAG on the current reserve status and account for all transactions occurring between the two companies. Moreover, companies will also be required to provide public reports on the specific composition of their cash and non-cash reserves.
In this regard, New York Attorney General Letitia James said Bitfinex and Tether covered their losses and defrauded their clients by inflating their reserves. When Stuart Hugner, Tether’s general counsel, Cointelegraph, was asked about this latest incident, he responded with an elusive response, saying:
“We are delighted to have reached an agreement with the New York State Attorney’s Office and brought this case up earlier. We look forward to continuing to lead our industry and serve our clients.”
Does the exclusive ban in New York make sense?
To gain a better legal understanding of the situation, Cointelegraph spoke with Josh Lawler, a partner at Zuber Lawler, a law firm that specializes in cryptographic and blockchain technologies. In his view, the lawsuit, and particularly the nature of the settlement in which Tether and Bitfinex agreed to cease operations, underscores the confusion inherent in the regulation of digital assets in the United States.
Additionally, the agreement between Bitfinex and Tether to prohibit the use of their products and services by individuals and entities in New York on paper appears nearly impossible, according to Lawler:
“Are they saying that no one in New York can own or trade Tether? Tether is traded on nearly all current cryptocurrency exchanges. While Tether may limit the use of Tether tokens by New Yorkers, is it really a good idea? Do we now have a world where it can?” Does each state separate some distributed ledger projects from operating within its jurisdiction? ”
Finally, even if the agreement between Bitfinex / Tether and NYAG is in the form of a settlement – which means that it is not subject to appeal or federal control under commercial regulations – a ban that focuses on the government could complement existing legal requirements. absence of security.
The added transparency is always good
Now that regulators have asked Tether and Bitfinex to be more forthcoming about their financial transactions and possibly impose a small fine on them, it appears that more and more companies working with USDT are now having to pull their socks off and place them in their general ledgers. Arrangement. Joel Edgerton, CEO of BitFlyer USA, told Cointelegraph:
“The key to this settlement is not ending the trial, but an increased commitment to transparency. There is still a risk from USDT, but increased transparency should strengthen the company’s management in the volume of transactions.”
Likewise, Tim Bion, a public relations officer at OK Group, the parent company behind the OKCoin cryptocurrency exchange, believes the settlement could be viewed as a win-win scenario for not only NY OAG and Tether / Bitfinex, but also for the cryptocurrency industry. As a whole, citing the fact that the 17-page settlement did not reveal any mention of manipulating Bitcoin (BTC) with USDT.
Finally, Sam Bankman-Fried, CEO of FTX, also believes that settlement has generally been a good development for the industry, especially in terms of transparency, and adds:
“Like many other settlements, this had an illicit consequence, but the high-level conclusion is that they did not find evidence to support the most serious allegations against Tather – there is no evidence of market manipulation or unrestricted printing.”