Tether and Bitfinex reached a settlement with the New York Attorney General’s Office (NYAG) and Tether gets a $22 million ransom note.
In 2019, the New York attorney general filed a memorandum alleging that Tether and its sister company, Bitfinex, ran an unregistered securities offering. This case is mostly unrelated to the SEC lawsuit against Ripple, other than its wide-ranging implications on the crypto industry. Thankfully, one of these cases is getting resolved this month (and it's not Ripple).
According to a statement, Tether admitted no wrongdoing in their case, but Bitfinex and Tether agreed to pay $18.5 million and provide quarterly reports describing the composition of Tether’s reserves for the next two years.
"The amount should be viewed as a measure of our desire to put this matter behind us and focus on our business," said the statement. Tether claims they have provided over 2.5 million pages of documentation to help the case.
NYAG has settled with Bitfinex over a 22-month inquiry into whether the cryptocurrency exchange Tether sought to cover up the loss of $850 million in customer and corporate funds by Bitfinex.
The case alleges that Tether loaned USDT to Bitfinex investors, raising suspicion that the coins are not fully backed by U.S. dollar reserves. The loan has since been paid in full, but the deal have been under investigation for over three years.
Tether has enjoyed riding on the coattails of Bitcoin and Ethereum this year, growing from under $20 billion market cap in November to over $36 billion at the time of writing, growing by almost 50% this year alone.
The dollar-pegged stablecoin has been historically favored among over-the-counter (OTC) traders. According to Tether’s Transparency page, they are holding nearly $36 billion in total assets, with 55% used for Ethereum.
Once your Tether account is set up and verified, and you deposited enough tether to your Tether account to withdraw, you can actually redeem the tokens for ACH transfers or wire deposit in fiat, as promised.
In 2018, finance professor John Griffin and co-author Amin Shams argued in a research paper, Is Bitcoin really un-tethered?, that USDT was used to manipulate Bitcoin (BTC) prices as it surged to $20,000.
Also this week, Tether claims to have received a ransom note asking for 500 bitcoin, currently worth about $22 million. They detailed about the extortion attempt in a tweet on Sunday. “While we believe this is a pretty sad attempt at a shakedown, we take it seriously," tweeted Tether.
Some pundits have described Tether as "too big to fail" and "an unstoppable force of nature" for the digital asset industry.