Bitfinex Makes Good On Tether Loan By Repaying $100 Million Of $700 Million Loan From USDT
Bitfinex, a prominent crypto exchange, has recently repaid $100 million USD from the $700 million loan that the company had with its sister company Tether, a stablecoin operator.
According to the announcement, the payment was made via a wire transfer to the banking account of the other company. The payment was expected to be made later this year, but the company decided to go ahead and do it this week. Also, all interest accrued under the loan was also paid up until June 30.
In case you are not familiar with this very divisive loan, Bitfinex was facing a hard time in the first half of 2019 when one of its payment processors did not pay it. Crypto Capital, the payment processor, had its funds seized by the authorities because it was linked to illegal activities.
In order to continue its activities, the company decided to loan the money from Tether, which shares the same owners of Bitfinex. The trouble started when the New York Attorney General complained that the $700 million USD that was loaned to pay for the $850 million hole caused by Crypto Capital not paying.
The funds that were the basis of the stable price of Tether (USDT), should not be used for loans, according to the New York Attorney General, and this caused controversy and the start of a legal battle.
While the two companies share owners, they are distinct entities and Tether is supposed to be backed 1-for-1 with the USD. By lending the money, some of the value of the token was actually backed by debt, not fiat. Curiously, this did not affect the price of the tokens at all. They still continued to trade at normal prices even after the controversy.
Right now, the battle between the New York Attorney Office and IFinex, the holding company that manages both Bitfinex and Tether, continues. The company is being accused of covering up the losses, but it has filed a motion to dismiss the accusation, affirming that the attorney office is out of its jurisdiction and lacks the data to continue its claims.
This month, the legal battle will reach its next chapter. The NYAG office has until July 8 to file its opposition with the court and IFinex has until July 22. At the end of the month, on July 29, both companies will face each other in court again.