Bitfinex Says It Repaid Tether for $550M Loan at Center of NYAG Probe

Bitfinex says early Friday it repaid fully of the loan to Tether.

Feb 5, 2021 at 9:12 p.m. UTC
Updated Sep 14, 2021 at 12:07 p.m. UTC

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.

Tether's market cap.

CoinDesk reached out to Deltec for confirmation of the paid loans. At press time, Deltec had not responded to CoinDesk’s requests for comments.

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
El Salvador’s Nayib Bukele Promotes Bitcoin Adoption by Emerging Countries

Bukele is hosting financial representatives from 44 developing economies as part of annual meetings of the Alliance for Financial Inclusion.

Bukele is hosting financial representatives from 44 developing economies as part of annual meetings of the Alliance for Financial Inclusion.

2
Pierina Merino: Rethinking Social Media for the Metaverse

Meet the 30-year-old Venezuelan founder of FlickPlay, a hot social metaverse platform. Merino will appear at CoinDesk's Consensus festival.

Meet the 30-year-old Venezuelan founder of FlickPlay, a hot social metaverse platform. Merino will appear at CoinDesk's Consensus festival.

3
Former Wyoming Banking Commissioner Goes Web 3

Albert Forkner has joined crypto infrastructure company Fortress Blockchain Technologies.

Albert Forkner has joined crypto infrastructure company Fortress Blockchain Technologies.

4
Voyager Digital Downgraded by Compass Point on Concerns Over Crypto Markets, Retail Investing

The firm now rates the shares at neutral, down from buy.

The firm now rates the shares at neutral, down from buy.