By market capitalization, the cryptocurrency “USDT” is the largest and most widely used stablecoin. The company behind it, Tether, has come under fire several times in recent years. The prosecutor’s case against the firm and exchange Bitfinex has now been dropped.
Tether and Bitfinex announced that they have reached a settlement with the New York Attorney General’s Office. The settlement cost the Tether consortium $18.5 million. Among other things, they were originally accused of not fully backing their cryptocurrency USDT.
After two and a half years of legal dispute, the parties have agreed to end the matter. Crypto exchange Bitfinex provided authorities with more than 2.5 million pages of documents to answer their questions. Full cooperation with the Prosecutor”s Office apparently paid off. The agreed amount is seen as acceptable to finally settle the unresolved matters.
Unresolved loan from Tether
The agreement clarifies allegations of public disclosures related to a loan from Tether to Bitfinex. Bitfinex had problems accessing about $850 million of its funds in 2018, which were frozen by a payment processor. Thus, they were granted a loan from Tether, which was not publicly announced at the time.
“The loan was made to ensure continuity for Bitfinex’s customers. It has since been repaid early and in full, including interest. At no point did the loan impact Tether’s ability to process redemptions [of USDT].” – Press Release Tether
The Attorney General’s Office essentially concluded that the Tether consortium could have done a better job in publicly disclosing what happened. Also, their cryptocurrency was not fully backed at all times as alleged.
Strong growth in the last year
According to its own statements, the stablecoin company will now seek to increase its transparency. As part of the agreement, additional information about Tether’s reserves will be made public. Therefore, the sword of Damocles of unregulated affairs around Tether has now been removed.
Despite the ongoing lawsuit, the market capitalization of USDT has grown from $2 billion to over $34 billion during the legal dispute. Bitfinex also experienced strong growth this year in particular. According to the press release, they can now fully focus on the booming crypto business again.