Bitcoin Forum

https://finance.yahoo.com/news/ny-attorney-general-sues-bitfinex-210643545.html

Here is the affirmation document:

https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=vIexA1b0spKOnK_PLUS_ZUGTJ3A==&system=prod

Bitfinex official response from the allegation, here (https://www.bitfinex.com/posts/356).

The NYAG say Bitfinex believes the cash was stolen. Bitfinex in their statement say "we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded". These two statements conflict with one another.

At the end of the day, if Bitfinex does not get this money back, I don't believe they will be an ongoing concern. They made an estimated $6 million in the past 30 days in operating profits, but half that will need to go to interest for the Line of Credit. At this rate, it will be years before the losses are recuperated.

There is not criminal case yet
Case like that on court can take years
But for sure it will be used to influence bitcoin price
We had now kind of chaos. Traders are mostly removing his coins from finex
And moving from Tether to fiat or other stable coins

There is also yet another case at New York court that time against JP Morgan Chase
very interesting to read


https://www.ccn.com/federal-judge-rule-crypto-is-cash-chase-bank-lawsuit

https://youtu.be/cwDVjIRkklU

The statements released by the AG and Bitfinex are indeed of conflicting nature, yet I for one thinks that Bitfinex is on the wrong here due to the nature of its relationship with Crypto Capital. No contracts whatsoever are binding their relationship with each other, and one party, Crypto Capital, can just run away with the money and Bitfinex can't do something about it. As for operations, many traders have already been pulling out assets from the exchange in question, and could potentially lead to its closure just months after this case was filed.

Poor finex, but they had it coming anyway.

$370M of the missing money has been frozen by Polish authorities last year, due to someone using either Bitfinex or Crypto Capital to launder drug money. So technically that part of the money hasn't been 'lost', but seeing how long and drawn-out legal cases can become, years can pass before the funds will be returned.

CryptoCapital was laundering Colombian cartel money
Strange is that it was maybe still is 800 mln $
USA didn't blacklisted his offshore like Europe did
There was a lot of information released by Paradise Papers about Crypto Capital Polish Bank and Bitfinex
It is enough for US authorities to look there and ask journalists
But USA is keeping his offshore because his banks need them

I found two (https://cointelegraph.com/news/unconfirmed-polish-prosecutors-seize-400-mln-amid-allegations-bitfinex-is-implicated-in-fraud) articles (https://www.blockcubed.com/claimcolombian-drug-cartel-operations-may-be-linked-to-bitfinex-cryptocurrency-exchange-as-authorities-seize-380-million/) to be about what I presume you are referring to.

Bitfinex had to borrow $700M from tether, out of the $850M that is unaccounted for. It would not be unreasonable to say Bitfinex had $150M in reserves.

If the $370M is in fact part of the $850M, Bitfinex's ability to recover the money will depend largely on if they were properly served with the seizure notice, and what they did to that customer's account.

Worse case scenario, if Bitfinex was properly served, but they eventually successfully processed a withdrawal for the customer despite the seizure notice, they will be on the hook for the entire $370M, and this money is in fact gone. If the customer for example withdrew bitcoin, deposited the bitcoin to binance for example, and binance properly froze access to the money, Bitfinex *might* be able to get the $370M back, but I am not an expert in this area, and am not explicitly sure.

A best case scenario is Bitfinex froze this customer's account and the account is currently containing at least $370M. In this case, Bitfinex could simply administratively debit the customer's account to cover the difference, and the customer could try to recover the money from Poland themselves if they have a legitimate claim to it.

If Bitfinex was not properly served with a seizure notice, and let the customer withdraw, the case becomes more complicated, and potentially will be drawn out.

neither the NYAG nor bitfinex could actually confirm the $850m in crypto capital funds held on behalf of bitfinex was seized: https://bitcoinmagazine.com/articles/bitfinex-faces-legal-action-from-ny-attorney-general-heres-what-this-means/

so we're not really sure if it was stolen or seized. in the end, it doesn't really matter and bitfinex is clearly spinning things. the important fact is that bitfinex lost access to $850m, couldn't process its customer fiat withdrawals, and dipped into tether funds to cover the shortfall. depending on other assets held by bitfinex/tether, they may not be insolvent. but this certainly suggests they are.

Yes, Bitfinex isn't saying enough, or isn't saying the truth. It says 850 millions have been seized, and that is certainly possible, but in that case, it means there are legal proceedings which could prove the seizure. Only thieves seize money without traces.

Bitfinex never had account in polish bank.They have account through Crypto Capital
but that account has been frozen because of cartel  ML discovered
So maybe here is that lost. Crypto Capital money on Polish bank frozen by Polish FBI

There is surprisingly little public documentation of the Polish seizure. The only primary sources are Polish-language and contain very few details. Further, it is only speculation that the Polish shell company in question was controlled by Crypto Capital and that the money (or some of it) belonged to Bitfinex.

It's clear, however, that Crypto Capital and the exchanges it serves -- Cex.io, Bitfinex, Coinapult, etc. -- have been facing worse and worse withdrawal delays over the past year. It's not just Bitfinex or Tether. There may exist legal proceedings that could prove various bank seizures, but if we're talking about shell companies in foreign jurisdictions, it may be hard for us average joes to connect the dots.

So it's possible Bitfinex hasn't done anything wrong, with Crypto Capital the only culprit? Hmmm...

I hope that would be the case, but we were talking of 850 millions, and there's only 370 which may have been seized in Poland, so what about the remaining 480 millions?

If Bitfinex wants to stay in business, it has a lot to explain. With all details given to the court in NY, so it will take more than a blog post...

Bitfinex said previously that the funds are currently seized and now it can't confirm?. They're saying different version to different people.  If there has indeed been a seizure, it is due to a court decision. In any case, there is probably a legal notification. Why is it so complicated to present it so that it can clear things up once and for all? What is the version for Crypto Capital for this ?

This can have debilitating effects on Bitfinex as we know that people are always afraid of any business that experienced highly-publicized case on the court. Bitfinex remains to be a big player in the cryptocurrency exchange sphere and I am still hoping they can be able to overcome this one, learned from the lessons here and move on to continue being a big leader of the industry.

Bitfinex took a loan from tether for the amount of the money that is inaccessible, so they can process customer withdrawals.

I don't think bitfinex has $850M+ in reserves because they have a practice of paying most of their operating earnings to shareholders. They invested in a small number of altcoins, IOTA being most notable, but altcoins have performed very poorly, and I don't know how much these investments will help.

Based on the above, I don't think bitfinex is solvent. I am comfortable saying I believe they can pay out all customer deposits because of the loan from tether. Bitfinex does not currently have access to $850M worth of USD. Some of this money is customer deposits, and bitfinex did not disclose this to the public until the NYAG disclosed this fact for them.

The failing to disclose the missing USD is probably something most of their customers will frown upon.

Their saying that they will get the money back within a few weeks is also overpromising.

I agree, their promise to a large shareholder that they will recover the money in a couple of weeks is probably not realistic. 

I think they might have held off on starting litigation out of not wanting the issue to be public. With the NYAG changing these circumstances, they no longer have that problem.

https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents

'Tether’s reserves of cash and cash equivalents alone (without the line of credit) would cover approximately 74 percent of the outstanding amount of tether.'

I wonder how this will be digested. My guess is no one's going to care just like 'real' fiat.

Polish authorities have frozen a portion of the money a year ago already, with no progress in sight (or they would have likely shared some information), so they will totes get the money back, within two weeks™.

https://www.coindesk.com/two-charged-with-running-shadow-banking-service-for-crypto-exchanges

A bit more fun here. Not part of this specific case but it's more Bitfinex overspill. My feeling is that they're going to keep peeling back ever more juicy layers until the big poo at the centre is revealed. Then it attacks.

For the sake of Tether holders, I hope that's true now that Tether appears to be a major shareholder in Bitfinex's parent company. Has anyone done any back-of-the-envelope math on how long it would take Bitfinex to repay the loan?


That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

Hmm. I dunno. For the longest time an awful lot of people were fully convinced it was 100% fictional. The one thing that's come out of this ballsup is confirmation that it was properly backed once upon a time.

They're also taking steps to restore it. Whether people will swallow BFX's shit again is another matter but they probably will. This time around if their weird IEO sale succeeds then that's real backing from real people out in the open which is a first for Tether.

If that completes Tether is then in the strongest position it's ever been in in terms of nixing the scepticism that's always surrounded it.

Then again all of these legal proceedings might unearth some much more unsavoury practices along the way.

I can only imagine what the various US agencies investigating Tether and Bitfinex have unearthed by now. In the long run, it doesn't really matter whether they recover from this or not. This will eventually end in tears. Regulators are years-deep into these investigations now. After another couple bank account seizures, another credit line won't save Bitfinex.

I always had a feeling that Tether was fully backed, but they're in a perpetually risky position where that could change at any moment.

all this will only "speed up" the regulation, and I would FINALLY say.

It is time to make transparency especially towards those who manage millions of dollars

Update:


https://www.justice.gov/usao-sdny/pr/arizona-man-and-israeli-woman-charged-connection-providing-shadow-banking-services

That name sound familiar? RAVID YOSEF? Yes, because it's the same person who is part of the QuadrigaCX exit scam. So it looks like there is a connection way before everyone really knows what's going on behind, and it looks like there are some connections between Bitfinex and QuadrigaCX after all. So the plot thickens.

It has long been publicly known that tether and Bitfinex have common overlapping ownership and management.

Bitfinex has made about $7M this month based on my estimates, based on their published trading volumes. This has been a very slow month, after several slow months. In 2017, they were likely making $100+M per month based on the same information.

That is only based on cash equivalents not total assets. Including total assets tethers are fully backed.

That's the point. A few months ago, they were fully backed by cash. Now, a quarter of Tether's assets are nothing more than an unsecured loan to a company who is battling insolvency and legal problems left and right. Tethers are backed by a piece of paper whose value is dependent on Bitfinex's continued success.

Given that, it seems crazy to value Tethers at 1:1. The risk seems much worse than that.

Bitfinex is planning on holding an IEO next week to plug the hole from their seized $850M.

Apparently people just love to throw hundreds of millions of dollars to a company being sued by a government agency, just after losing $850 million dollars.   :D ;D

The loan is not unsecured, it is secured by shares in Bitfinex and presumably the accounts receivable from CC.

It is normal for banks to not have cash to backup all deposits of their customers. It is normal for banks to hold about 10% of customers deposits in cash/cash-like securities.
I believe Kraken allows for shorting of tethers if you believe they are overvalued.

I don’t believe any government agency is suing Bitfinex. If you are referring to the court order obtained by the NYAG, this is not a lawsuit.

I have seen what I believe to be a marketing document for the IEO and it appears Bitfinex is asking customers to prepay a billion dollars worth of trading fees in advance in exchange for a trading fee discount and other features regarding the tokens.