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Bitfinex Might Suffer More Legal Battles In Other States

The digital asset space has been seeing lots of legal battles within the US. Although the region is crypto-friendly, crypto service providers have reported several legal cases over the years. Around two years ago, Bitfinex has some troubles with New York authorities, which led to several investigations. Fortunately, this firm has settled its issues with authorities within that state, but legal experts believe that it would likely face similar problems in other states.

According to lawyers, the firm, which is the parent company of Bitfinex, an exchange and the creator of popular stablecoin, Tether, might have more problems in the future. Earlier this week, the news broke out that Bitfinex had settled things with the AG’s office, which led to an applaud from the crypto space for the firm’s freedom.

Bitfinex transfers $850 million from Tether’s reserve to cover loses

The company shared this news and explained that its exchange and stablecoin would move past the problems after the investigation’s conclusion. But the battle might not be entirely over as experts believe that the firm would be scrutinized by other state’s Attorney General regarding the issue.

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New York’s attorney general, James, shared that the state was ending Tether and Bitfinex trading within the region after the state covered around $850 million in losses worldwide and deceiving people by exaggerating reserves. The legal expert added that those trading digital currencies in New York could not avoid the laws.

The well-known state might influence other US regions to declared the Bitfinex business’s unwanted due to the illegal act of overstating their reserves. The company might not move past this episode as all states would protect investors’ rights by adequately investigating.

The problems with NYC authorities started in 2019 when the central attorney had claimed that the business used an $850 loan from Tether to cover up losses. The transfer from Tether led to the reduction of its dollar reserve.

New York’s AG mandates quarterly reserve report

The firm explained that Tether, a stablecoin that can stabilize its value, had 1:1 backing from the American dollar. The company now has other assets in its reserve, meaning that it has deceived people. Bitfinex and NYC’s attorney general finally settled, and the settlements include Bitfinex and Tether not operating in New York. This means that the firm would not do business with firms or people in the city.

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The office also mandated the crypto service provider to submit quarterly reports on its reserves, giving the office the company’s stance at that point. The parent company would also pay a fine of around $18.5 million without publicly announcing its mistake.

This conclusion closes its problems with New York, but what about other states in America? Other states can also investigate the activity and arrive at the city’s conclusion.

A legal expert, Marc Boiron, spoke on the issue while admitting that he doesn’t know the AG’s office’s plans, but he believes that Bitfinex would likely face some future investigations. He added that other states would see how Tether discloses the reserves, which the AG’s office had mandated it to every quarter. According to Boiron, if the states are not satisfied with the disclosure, they would likely take some steps.

Adebayo Owotunse (Nigeria)

Adebayo Owotunse is a versatile writer who has written hundreds of crypto articles for dozens of agencies across the years. He is now also the newest addition to the Tokenhell writers team.

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