Coverup allegations against iFinex roiling cryptocurrency markets

New York’s AG says the operator behind Bitfinex and Tether tried to hide millions in losses with client funds. The exchange denies the charges.

Ragan Insider Premium Content
Ragan Insider Content

An injunction filed by the New York attorney general’s office has brought new scrutiny—and heightened skepticism—to the cryptocurrency field.

Major coin operator iFinex faces allegations that it used client money to cover big losses.

The thrust of the allegations is that iFinex, which operates both a coin (Tether) and a coin exchange where cryptocurrency is traded (Bitfinex) used cash reserves from its coin company to cover losses from its exchange after sending millions to a bank in Panama, where the money disappeared.

The money reserves it used to cover the losses were supposed to back coin owners at a rate of $1 per coin. Instead, Tether owners were now backed by Bitfinex stock.

The allegations chip away at consumer trust—an essential asset for any enterprise—and for businesses built on confusing or mysterious practices, like cryptocurrency, that trust is paramount.

The company argues it has done nothing wrong, but many on social media are calling foul.

Engadget wrote:

To read the full story, log in.
Become a Ragan Insider member to read this article and all other archived content.
Sign up today

Already a member? Log in here.
Learn more about Ragan Insider.