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New York AG accuses cryptocurrency exchange of fraud

The office of New York Attorney General Letitia James has accused cryptocurrency exchange iFinex Inc. of deliberately concealing "the apparent loss of $850 million dollars of co-mingled client and corporate funds."

In a press release put out on Thursday, James announced that she had obtained a court order against iFinex, which operates both the Bitfinex exchange and the Tether cryptocurrency. The filing accuses the executives of the exchange of violating New York law through their involvement in activities that may have defrauded crypto investors in the state.

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds,” James said. “New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

In response to the statement from the Attorney General, Bitfinex issued a statement of its own arguing that the claims are “riddled with false assertions” and that the funds are not lost.

“The New York Attorney General's court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million ‘loss’ at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded,” the statement reads.

Bitfinex said it intends to “vigorously” challenge the actions.

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