On Tuesday (July 2), cryptocurrency exchange Bitfinex announced that on July 1 it had repaid $100 million of the “outstanding loan facility” to Tether.
Before we take a closer look at Bitfinex’s proud announcement, it is worth doing a quick recap of the Bitfinex/Tether story.
According to the announcement on April 25 by the office of Letitia James, the New York Attorney General (NYAG), her office “had obtained a court order enjoining iFinex Inc., operator of the Bitfinex virtual asset trading platform, and Tether Limited, issuer of the ‘tether’ virtual currency, and their related entities, from further violations of New York law in connection with an ongoing activities that may have defrauded New York investors that trade in virtual or ‘crypto’ currency.”
Per the filings made by the office of the NYAG at the Manhattan Supreme Court, Bitfinex, to cover “the $850 million of co-mingled client and corporate funds that it handed over, without any written contract or assurance, to a Panamanian entity called ‘Crypto Capital Corp’,” had worked out an arrangement with allegedly affiliated company Tether, whereby “Bitfinex gave itself access to up to $900 million of Tether’s cash reserves, which Tether for years repeatedly told investors fully backed the tether virtual currency ‘1-to-1’.”
Furthermore, these filings said that Bitfinex had “already taken at least $700 million from Tether’s reserves.” (The allegation was that Bitfinex had access at least $700 million from a $900 million line of credit from Tether.)
However, what is not clear is exactly how much Bitfinex needs to pay back to Tether. One thing we did know from the filings was that the line of credit (which pays 6.5% p.a.) was secured by iFinex (parent company of Bitfinex) shares.
Now, here is what Bitfinex said earlier today:
- Bitfinex had repaid $100 million of the outstanding loan facility to Tether, and that this payment was “fiat wired to Tether’s bank account.”
- This amount “was not yet due to be paid to Tether under the facility, but Bitfinex has made the prepayment based upon its financial position at the end of the second quarter of 2019.”
- Also, yesterday, Bitfinex had “fully prepaid all interest accrued under the loan facility to Tether up to the end of day on June 30, 2019, also in fiat.”
A short time ago, Tether confirmed that “on July 1, 2019, it received $100,000,000 in fiat as prepayment on the outstanding loan facility from Bitfinex in its bank account ,” and that “it has received all interest accrued under the loan facility in fiat due to it up to the end of day on June 30, 2019.”
Featured Image Courtesy of Bitfinex