As Bitfinex Gets Sued By NY AG, Shareholder Reassures Missing Funds Will Be Released in a “Few Weeks”

A recent lawsuit by the NYSAG is unveiling a lot of unsettling details about the Bitfinex exchange and the Tether stablecoin.

Though there has always been controversy around Tether for its lack of cash liquidity, the bigger allegation at this point is over the missing $851 million that Bitfinex is supposed to have. In an attempt to reassure investors, The Block reported that the funds will be available within the next few weeks, according to Bitfinex.

A shareholder with Bitfinex, Zhao Dong, said that the CEO personally spoke with him to confirm that the funds will soon be unfrozen. An official public response was issued by Bitfinex earlier today, saying that the allegations from New York are “riddled with false assertions.” Furthermore, Bitfinex stated that there has been no loss from Crypto Capital and said instead that the funds have been “seized and safeguarded.”

Tian Jia, another shareholder with Bitfinex, expressed that the executives with the exchange have been in communication with the shareholders. When speaking with CoinDesk, Jia stated that the funds missing involves the funds of customers, which is in fiat. Therefore, Jia explained that “it can’t be stolen” and that the regulators are actually the ones freezing it.

The lawsuit tells a much different story, saying that Bitfinex and Tether had collaborated, allowing Bitfinex to cover their loss with the reserve funds held by Tether. The Attorney General’s office said that Tether’s reserves were missing at least $700 million to cover the missing liquidity.

Bitfinex has continually failed to perform audits of their company, which is something that worried the public about Tether at the beginning and still now. In May 2017, the company claimed to have recruited Friedman LLP for a “balance sheet audit.” However, about eight months later, a blog from Bitfinex’ed on Medium explains that no actual audit had happened at that point.

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