Bitfinex repaid the remaining loan balance of $550 million to Tether
Bitfinex announced on Friday, 5th Feb, that it repaid the remaining balance of $550 Million of the outstanding revolving loan to Tether. A per the announcement, the remaining loan along with the interest was paid out in fiat currency wired to Tether’s bank account in Jan 2021.
Tether opened a credit line for Bitfinex in 2018 due to the seizure of its payment processor’s accounts which held at the time approx $880 million of Bitfinex funds. The bank accounts of payment processor – Crypto Capital – in Poland, Portugal, the UK, and the U.S. were seized or frozen in 2018 by the governments due to a money-laundering investigation.
Bitfinex and Tether under the NYAG lens
NYAG is unimpressed with the line of credit. Argues exchange secretly covering shortfall via the Tether funds is a potential securities and commodities fraud.
To cover up the loss of Bitfinex customer funds, Tether – Bitfinex sister company – extended a revolving line of credit of up to $900 million for three years terms at an interest rate of 6.5%. The total accessed loan was $700 million. Bitfinex repaid $100 million each in 2019 and 2020. The last remaining $500 million along with interest (~6.5%) was paid in Jan 2021.
This arrangement of accessing Tether’s line of credit was secured by a share charge of over 60,000,000 iFinex Inc. shares, which DigFinex agreed not to otherwise encumber.
Given that DigFinex and iFinex are entities that are both run by Bitfinex owners and the loan amount is not secured by hard assets, the attorney general’s office is entirely unimpressed by this loan and filled the case against Bitfinex for potential securities and commodities fraud.
The case is ongoing and currently Bitfinex is producing documents sought by the NYAG.
