Bitfinex Says It Repaid Tether for $550M Loan at Center of NYAG Probe
Crypto exchange Bitfinex claimed Friday it repaid the remaining balance of a $550 million loan to its sister firm, Tether, the issuer of the tether (USDT) stablecoin.
In 2018 the exchange borrowed more than $600 million from Tether, with which it shares executives and ownership. The transaction was made public in April 2019 after the New York Attorney General’s Office (NYAG) alleged Bitfinex lost $850 million in customer and corporate funds to payment processor Crypto Capital Corp., and used funds from Tether’s reserve to secretly cover the shortfall.
Bitfinex previously announced paying off certain tranches of the loan.
The final payment was made in January and the line of credit opened by Tether back in 2018 has been cancelled, according to Bitfinex’s website.
As of April 30, 2019, the USDT stablecoin was only about 74% backed by fiat equivalents, according to Tether’s general counsel, Stuart Hoegner, because of the loan and a credit line Tether opened for Bitfinex to cover the lost funds. Hoegner is also the general counsel to Bitfinex.
But Tether’s Bahamas-based bank, Deltec, said late last month that the tether stablecoin is fully backed by reserves and the reserve “is more than what is in circulation.” The bank has not produced an attestation or audit from a neutral third part auditor to verify the claim.
Tether, the most-used stablecoin, has a total market capitalization of $28.31 billion at the time of writing. Data from Glassnode shows that tether’s market capitalization more than doubled in just five months.
CoinDesk reached out to Deltec for confirmation of the paid loans. At press time, Deltec had not responded to CoinDesk’s requests for comments.