Bitfinex and Tether Ordered to End Trading Activity with New Yorkers

Bitfinex, a cryptocurrency exchange owned and operated by iFinex, together with Tether, has been ordered to end all trading activity with New Yorkers by Attorney General Letitia James.

Bitfinex is one of the relatively few virtual currency trading platforms that allows traders to deposit and withdraw so-called "fiat" currency, for which Bitfinex is required to has sufficient U.S. dollars on hand to fill withdrawal orders submitted by traders.

However, the Office of the Attorney General of the State of New York ("OAG") found that, starting no later than mid-2017, Tether was unable to conduct significant banking activity and  did not have sufficient cash backing for the increasing numbers of tethers in circulation, contrary to the company's statement that each of its stablecoins were backed one-to-one by U.S. dollars in reserve.

Additionally, In 2019, Bitfinex and Tether misrepresented the status of the tether reserves after Bitfinex suffered a massive loss of funds because of its relationship with a purportedly Panama-based entity known as "Crypto Capital Corp".

Bitfinex and Tether are required to discontinue any trading activity with New Yorkers and submit regular reports to the OAG to ensure compliance with this prohibition. In addition, the companies have to pay $18.5 million in penalties to the state of New York.