![\"Bitfinex](\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2021\/02\/bitfinex-and-tether-fined-18-5m-in-settlement-with-ny-attorney-general-both-firms-barred-from-trading-in-the-city-768x432.jpg\")
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Bitfinex and Tether have been banned from operating in New York and must pay a fine of $18.5 million as part of a settlement with the New York Attorney General\u2019s (NYAG\u2019s) office over a case dating back to 2019<\/strong>.<\/p>\n In a statement<\/a> on Tuesday, NY Attorney General Letitia James accused the two entities of hiding severe losses from investors. \u201cBitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,\u201d said James.<\/p>\n She continued: \u201cTether\u2019s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.\u201d<\/p>\n Per the statement, an NY Attorney General\u2019s investigation found that the companies made false statements about the backing of tether, with Bitfinex using Tether\u2019s funds to clandestinely cover an $850 million financial hole at its bank Crypto Capital in Panama.<\/p>\n According to the investigation, from 2017, Tether had no access to the banking system and did not have reserves to back the tether (USDT<\/a>) in circulation at the time. Bitfinex stresses that it did not lose any money, claiming Crypto Capital\u2019s funds were confiscated by governments in Portugal, Poland and the U.S.<\/p>\n Bitfinex and Tether have now been barred from having any trading activity with the citizens of New York, as a result. The NYAG requested that the two companies submit regular reports on core business functions. Tether must also offer public disclosures, by category, of the assets backing tether, including disclosure of any loans or receivables to or from affiliated entities.<\/p>\n