CryptoScoop
November 29, 2020

Bitcoin exchange Bitfinex pays $100 million to Tether for outstanding loans

  • The Bitcoin exchange, Bitfinex, makes a $100 million payment to Tether for the outstanding loan service. 
  • Bitfinex acquired this debt because of an alleged theft by one of its partners to the exchange.

Bitfinex completed a payment to its sister company Tether worth $100 million. The exchange acquired the debt with Tether when it reported that one of its partners, Crypto Capital, stole the funds that Bitfinex managed to raise in an Initial Exchange Offering (IEO). The stolen funds are estimated at $850 million. The payments Bitfinex has made on this loan have been controversial. The exchange is being investigated for manipulating Tether funds to cover the shortfall.

According to the exchange announcement, the payment was made on February 28 by fiat wired to Tether’s bank account:

This payment is all on account of principal. Interest on all amounts due under the facility agreement has been prepaid up to March 2020.

Manipulation of the price of Bitcoin by Tether

This is the second payment that Bitfinex has sent to Tether for the acquired loan. In addition, these payments initiated the series of legal suits that Bitfinex, Tether, and their parent company iFinex have suffered. In April 2019, the New York State Attorney General’s Office initiated proceedings against the above entities. The investigation led Tether to confirm that the stablecoin USDT is only 74% covered by the US dollar.

On the other hand, Bitfinex and Tether have been accused of manipulating the price of Bitcoin and the whole market. In late 2019, the entities were sued over a study claiming to have proven the manipulation. The applicants claim that the USDT was used to purchase Bitcoin and subsequently inflate the crypto market. This fueled the bull market in late 2017 and ultimately caused the price of BTC to fall.

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