The crypto community has been laser focused on the current dilemma between Bitfinex exchange and New York prosecutors over the alleged loss of $850 million of co-mingled customer and corporate funds. After the craziness last week, the New York Attorney General’s (NYAG) office has now demanded that Bitfinex must show transparency by turning over documents tied to the firm Tether.
Also read: Crypto Community Monitors Bitfinex Wallets and the Strange 6% BTC Premium
NYAG Wants Bitfinex Disclose Tether Documents
News.Bitcoin.com recently reported on the NYAG court documents that accuse the cryptocurrency exchange Bitfinex of losing $850 million and using the stablecoin company Tether to cover the loss. The Bitfinex and Tether saga has continued into its second week with the NYAG office and the Attorney General Letitia James demanding Bitfinex release documents concerning the Tether situation. The recent filing explains that the NYAG office believes Bitfinex has had more than enough time to resolve the situation and the agency wants all relevant documents that explain how Tether played a part in this ordeal.
“We’ve given you much latitude to resolve these situations and months beyond your original estimates, we need to have more transparency now,” the NYAG filing detailed. “While that and other discrepancies do not change the core issues in this case — that Bitfinex and Tether misled their clients and investors — they only heighten the OAG’s need to obtain documents and information in a timely, organized fashion so that the OAG may understand what has taken place, and what continues to take place, at these companies.”
After the NYAG filing, Bitfinex responded by explaining that the preliminary injunction filed last week cannot be justified and the NYAG office will “not succeed on the merits.” Moreover, Bitfinex noted that “there was no ongoing fraud, and no ‘victims’” and the NYAG must establish some sort of grounds for authority, in order to address the company in this fashion.
An Initial Exchange Offering and CMC Removes the Bitfinex BTC Price From Its Weighted Average
The last few days have also revealed that Bitfinex may try to raise $1 billion through an initial exchange offering (IEO). Zhao Dong, a Bitfinex shareholder, told the press on May 1 that the IEO organizers might issue 1 billion tokens that will be sold for $1. Zhao also claimed that $500 million were already subscribed and qualified investors will be able to participate. Moreover, Zhao operates a lending platform called Renrenbit and allegedly the firm has been preparing to start pre-orders for the IEO token, called LEO.
Currently, Bitfinex has not confirmed the IEO or the pre-sale of LEO on the platform Renrenbit. If it does occur, it won’t be the first time Bitfinex has launched a sizeable token sale, as it released an equity exchange token in October 2016 in response to the exchange breach that took place two months prior. Bitfinex issued 20 million BFX tokens and its chief strategy officer, Philip Potter, said at the time that the firm’s “primary objective has been to make our customers whole.”
In addition to the recent filing from the NYAG office, the response from Bitfinex, and the purported IEO pre-sale, the BTC/USD premium on the exchange is still much higher than average. At press time, the price per BTC on Bitstamp is $5,652 but on Bitfinex the price per coin is $6,023. The Bitfinex BTC cold wallet still holds roughly 89,404 BTC or $514 million and hasn’t changed much since May 1. The wallet had originally dropped from 120,000 BTC to 89,404 in just a few days after the April 24 injunction. The Bitfinex ETH cold wallet had also declined by 40% since last week according to the exchange’s ETH-based cold wallet data. Since the exchange rate on Bitfinex has been between 5-8% higher than the average spot price, depending on the hour, cryptocurrency data website Coinmarketcap.com recently removed the Bitfinex BTC price from the overall aggregated global average. It’s safe to say this story is not over yet and will surely continue to unfold is the days to come.
What do you think about the situation between the NYAG, Bitfinex, and Tether? What do you think about Coinmarketcap’s decision to exclude the BTC/USD exchange rate from Bitfinex from its weighted average? Let us know what you think about this subject in the comments section below.
Image credits: Pixabay, Shutterstock, Scribd, Pacer, and Coinmarketcap.com.
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The post New York Prosecutors Demand Transparency From Bitfinex and Tether appeared first on Bitcoin News.
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