In brief

  • Tether and Bitfinex have already produced more than 2.5 million documentation pages in response to NYAG requests.
  • Parent company iFinex expects to finish turning documents over to the Office of the New York Attorney General (NYAG) within the next 30 days.
  • The two companies maintain that the USDT stablecoin is fully backed by their reserves.

iFinex, the parent company of crypto exchange Bitfinex and Tether—issuer of the eponymous stablecoin Tether—has provided millions of documents to the New York Attorney General in regards to its investigation. The state prosecutor’s investigation is into the alleged lack of disclosures over a missing $850 million that was seized by police from its previous banking partner.

The firm asked the New York State Supreme Court for a “few more weeks to produce supplemental information.”

In a letter submitted on January 19, iFinex says it is planning to contact the court in the next 30 days “to either provide a final status update or to schedule a conference to discuss any open items.”

According to Stuart Hoegner, the Bitfinex and Tether General Counsel, the “discussions with the AG's office are productive and going well.”

“We look forward to continuing those. We have mediated our disputes, which I think is positive progress. Unfortunately I can't share further details here,” wrote Hoegner on Tuesday.

Earlier this month, Bitfinex and Tether CTO Paolo Ardoino said that the two companies have so far “produced more than 2.5m documentation pages in response to requests from NYAG.”

In April 2019, NYAG Letitia James filed an order to the NY State Supreme Court, accusing Bitfinex and Tether of covering up the loss of about $850 million of client and corporate funds.

The NYAG claimed that the two companies handed the funds to Crypto Capital Corp., a third-party payments processor service based in Panama, to handle customers-withdrawal requests. When Crypto Capital failed to live up to the commitments, the respondents allegedly hid the losses through unspecified machinations.

Those accusations stoked fresh speculations that Tether printed new tokens without any actual backing by real US dollars, something the critics of USDT have been arguing for several years before.

A report published in 2019 suggested that Tether was responsible for driving up the price of Bitcoin, and many still fear that if the value of the stablecoin drops it will have a catastrophic impact on the largest cryptocurrency as well.

Some prominent players have dismissed such claims, though. “Worries that one stablecoin, which only represents 3% of Bitcoin’s market cap, could hurt Bitcoin by going bust is absurd,” said Dan Held, growth lead at Kraken, in a recent tweet.

“Just because Tether issuance went up while Bitcoin went up doesn’t mean it caused it. USDC, another popular stablecoin, had the same correlation, which is entirely intuitive as folks are wiring in money to take advantage of arbitrage opportunities,” he added.

Recently, Stuart Hoegner and Paolo Ardoino appeared on Peter McCormack’s “What Bitcoin Did” podcast, with the former pointing to “increased transparency” as one of the key things on Tether's roadmap for 2021.

Stuart Hoegner meanwhile said that “every Tether is 100% backed by our reserves,” adding that “there’s never been a single instance in which Tether could not honor a redemption.”