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Cryptocurrencies

Bitfinex, accused of USD 850 mln fraud, causes Bitcoin fall

Monday 29 April 2019 | 09:07 AM CET

US-based attorney general has accused the owners of exchange Bitfinex of using illicit transactions to mask USD 850 million in missing funds.

This event buckled the cryptocurrency markets. The news caused Bitcoin to fall nearly 6% to around USD 5,100, and raise questions about the viability of Tether, which many investors use as a surrogate for dollars to move in and out of different cryptocurrencies.

According to a 23-page legal filing, Bitfinex raided the reserves of a so-called stablecoin called Tether order to pay out customers demanding withdrawals from the exchange. Tether is a digital currency purportedly backed 1:1 by US dollars. The attorney general’s filing says the funds raided from Tether amount to USD 850 million. The amount of money is backed by a revolving line of credit from the exchange Bitfinex, however as the filing explains, Bitfinex appears to have borrowed that amount in order to cover a shortfall of its own.

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