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Bitfinex Wants to Subpoena Former Bank Exec Over Missing $880 Million

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Bitfinex

Bitfinex

Bitfinex, the controversial cryptocurrency exchanged headquartered in Hong Kong, has filed an application for discovery with a California court in an attempt to subpoena a former banking executive in order to access $880 million USD in frozen funds.

Bitfinex Seeking to Recover “Missing” Millions

iFinex, the parent company of Bitfinex, submitted the request on October 18 in the US District Court for the Central District of Southern California, asking permission to take the deposition testimony of Rondell “Rhon” Clyde Monroe, formerly Vice President of investment bank TCA Bancorp. The request says, “In those proceedings, [iFinex] seeks to recover approximately $880,000,000 of funds which it has entrusted to an entity named Global Trade Solutions AG (Global Trade), doing business as ‘Crypto Capital.’”

The filing notes that Crypto Capital “provided services as a payment processor to [iFinex], transferring funds to and from [iFinex] and its customers,” since 2014. However, since December of last year, Crypto Capital has failed to remit the funds, claiming its bank accounts in PolandPortugal, the United Kingdom, and the United States had been seized or frozen by the various authorities in each jurisdiction. Bitfinex alleges that Crypto Capital used accounts at TCA Bancorp to facilitate the transfer of the exchange’s funds and that Monroe can substantiate these claims.

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More Court Case Controversy

Meanwhile, Bitfinex remains embroiled in controversy, along with its sister company Tether, that it was involved in creating “the largest bubble in human history.” A class-action lawsuit was filed against the two companies in New York earlier this month, accusing them of manipulating the crypto market out of up to $1.4 trillion USD. Allegedly, Tether essentially printed billions of dollars worth of tokens to artificially inflate prices and convince the market that there was a considerably greater demand for cryptocurrencies than in actuality.

Further allegations in the suit claim that Bitfinex took an unlawful loan from Tether in order to cover up the missing $880 million USD, and did not disclose the situation to investors.

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Bitfinex Denies Money Laundering as Crypto Capital President Arrested

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Bitfinex

Bitfinex

Bitfinex has denied accusations of money laundering and claimed that it was a “victim of fraud” after the president of Crypto Capital was arrested in Greece yesterday.

Ivan Manuel Molina Lee was arrested in Greece and extradited to the Polish capital of Warsaw yesterday, where he has been charged with being part of an international drug cartel and money-laundering operation that allegedly siphoned funds between South America and Europe. Crypto Capital has been described as a “shadow bank” at the center of a fraud investigation into Bitfinex and its sister company Tether, both of which are controlled by parent company iFinex.

Missing Millions

The arrest comes just days after Bitfinex filed an application for discovery in an attempt to recover a “missing” $880 million USD held by Crypto Capital. The subpoena filing notes that Crypto Capital “provided services as a payment processor to [iFinex], transferring funds to and from [iFinex] and its customers,” since 2014. However, since December of last year, Crypto Capital has failed to remit the funds, claiming its bank accounts in PolandPortugal, the United Kingdom, and the United States had been seized or frozen by the various authorities.

In a statement today, Bitfinex has moved to distance itself from Crypto Capital, arguing that the exchange was a victim itself. Bitfinex says that any claims that Crypto Capital laundered funds on behalf of the exchange are “categorically false.” Further, in the statement, the exchange said that these developments will not deter it from recovering the missing $880 million USD.

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More Controversy for Bitfinex

The arrest of Lee is an unusual turn of events in the ongoing controversy regarding Bitfinex and Tether. Both companies are accused of creating “the largest bubble in human history” in a lawsuit filed in New York last month, which claims the companies manipulated the crypto market out of $1.4 trillion USD. The suit’s allegations center around long-standing claims that Tether essentially printed billions of dollars worth of tokens to artificially inflate prices and convince investors that demand was far greater than in actuality.

It is difficult to judge just how aware Bitfinex was of the shady ongoings at Crypto Capital, or if the exchange will ever recover the missing millions, but it will be interesting to see how this develops over the coming weeks.

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Bitfinex and Tether Lawsuit Revised After Plaintiffs Drop Action

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Bitfinex

Bitfinex

Controversial cryptocurrency exchange Bitfinex and its sister stablecoin issuer Tether have had a lawsuit against them withdrawn by two plaintiffs and re-filed with the addition of a new plaintiff.

The two companies were accused of creating “the largest bubble in human history” in a lawsuit filed in New York in October, which alleged that Bitfinex and Tether manipulated the crypto market out of up to US$1.4 trillion. A second, similar case was then brought against the two companies by Eric Young and Adam Kutz, who claimed that Bitfinex and Tether “monopolized and conspired to monopolize the Bitcoin market,” as well attempting to manipulate the market and making inaccurate claims.

Both cases were built upon longstanding claims that Tether essentially printed billions of dollars worth of tokens to artificially inflate prices and convince the market that there was a far greater demand for cryptocurrencies than was the reality.

A document filed on Tuesday, January 7, in the US District Court for the Western District of Washington shows that both Young and Kutz agreed to the voluntary dismissal of their case against iFinex, the parent company of Bitfinex and Tether. The suit was refiled the following day with the addition of David Crystal as plaintiff. It is not yet known why Young and Kutz decided to refile the case, and US law states that cases which have been voluntarily dismissed can never be brought to court again if it is dismissed a second time.

Both companies are steadfast in their denial of the accusations, describing the claims thrown at them as “meritless and mercenary.” Stuart Hoegner, general counsel to Bitfinex, said that the refiled case was also baseless and “will be disposed of in due course.”

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Tether had emphasized that its coin is backed 1:1 with the US dollar but flip-flopped on this stance in February when under investigation by the Department of Justice, changing its position to say its reserves “from time to time may include other assets.” Tether then made another walk back from this claim in April, when one of its lawyers admitted in court that the USDT was actually only 74% backed by cash or cash equivalents.

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Bitfinex and Tether Hit With Another Market Manipulation Suit

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Bitfinex

Bitfinex

Bitfinex and its sister stablecoin issuer Tether have been handed another lawsuit alleging both firms manipulated the crypto market, following a similar such suit last month in New York, which claimed the companies created “the largest bubble in human history.”

The second suit has been filed by Eric Young and Adam Kurtz at the district court in the Western District of Washington on November 22 and draws heavily from the previous lawsuit. In an extensive list of claims, Young and Kurtz say that Bitfinex and Tether “monopolized and conspired to monopolize the Bitcoin market,” as well as manipulated the market, manipulated information, or made inaccurate claims.

The manipulation centers around Bitcoin and its massive bull run in 2017, which saw BTC trade as high as $20,000 USD. Both lawsuits cite a study by academics at the University of Texas who analyzed over 200 gigabits of data relating to the transaction history between Bitcoin and Tether and found that the surge in value in late 2017 was attributable to one large trader, or a whale in the crypto world. Bitfinex hit back at that study, claiming it was “built on a house of cards” and unsubstantiated due to a lack of a complete dataset.

Bitfinex has again responded to the new lawsuit in a blog post on Sunday. “As we predicted last month, mercenary lawyers continue to try to use Bitfinex and Tether to obtain a payday. To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course,” the exchange wrote.

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While Bitfiex is resolute in its denial of the accusations leveled at it, the company and its sister firm Tether have regularly shrouded themselves in controversy and suspicion. Tether has frequently flip-flopped on its stance as to whether its coin is backed 1:1 with the USD. Recently, it said its stablecoin was backed by reserves but did not specify what those reserves were.

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Bitfinex and OKEx Hit by DDoS Attacks

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Bitfinex

Bitfinex

Crypto exchanges have made it easier for millions of people to trade in cryptos, but they have also been found to be vulnerable to attacks, and today, two crypto exchanges, Bitfinex and OKEx, reported Distributed Denial-of-Service (DDoS) attacks.

OKEx stated that the exchange suffered the attack last night, but none of its users were actually affected by it. Bitfinex appears to have been the subject of a similar attack today, and the extent of the attack is not yet known. The company took to Twitter and stated that the matter is currently being investigated.

Key Details

It goes without saying that this is not the first time that exchanges have been subjected to such attacks. A spokesperson for OKEx stated that that the company’s servers were flooded with internet traffic in a malicious attempt to disrupt its functioning. The Chief Executive Officer of the company, Jay Hao, stated that the large-scale attack was orchestrated by competitors.

Users of Bitfinex will be waiting to hear about the source of the DDoS attack and whether any accounts have been affected by the attack or not.

Bitfinex stated that normal activity has been resumed on the exchange after it put in place a “stricter protection level.” The Chief Technology Officer of the exchange, Paulo Ardoini, stated that although the exchange has advanced DDoS prevention mechanisms in place, the latest attack came about from a large number of different IP addresses. This means the system was crippled.

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OKEx spokespersons stated that the company has around-the-clock monitoring and technical support in place, which is why the company was able to repel the attack within a short span of time. While this was a bit of a setback for the exchanges, crypto enthusiasts would hope that OKEx and Bitfinex are not afflicted by it in the future.

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Tether and Bitfinex Unopposed to Lawsuit Consolidation

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Tether

Tether

Three plaintiffs who have been involved in three separate lawsuits against Tether and its sister company Bitfinex have moved to consolidate their cases into one class-action suit.

Court filings by David Leibowitz et al., Eric Young et al., and Bryan Faubus et al., accuse Tether and Bitfinex of creating “the largest bubble in human history” after they allegedly manipulated the crypto market out of up to US$1.4 trillion. All three cases were brought against the companies off the back of longstanding claims that Tether essentially printed billions of dollars worth of digital tokens in order to inflate prices and convince investors that the demand for cryptocurrency was considerably greater than in actuality.

All three cases have now been refiled as one in the US District Court for the Southern District of New York. While Tether and Bitfinex both refute the claims made against them, they have shown no objection to the consolidation of the cases, with Tether even writing in a statement that it “looks forward” to disproving the “fanciful accusations.” The move to consolidate the cases provides further clarity to the decision of Eric Young to withdraw his case and refile it with the addition of David Crystal as a plaintiff.

A fourth suit was also filed against Tether and Bitfinex last week, which is expected to be consolidated with the three already preexisting cases.

“Tether will continue to defend the digital token ecosystem and the many contributions of the cryptocurrency community, and will not now or in the future pay any amount to settle plaintiffs’ claims,” read the company’s statement. “Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing.”

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While Tether has always advertised that its coin is backed 1:1 with the US dollar, that position has been called into question recently. When under investigation by the Department of Justice in February, it changed its position to say that its backing may include other assets from time to time. This position was cast into further doubt when a lawyer representing Tether said that its coin was only 74% backed by cash or cash equivalents.

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Bitfinex Plans to Sell $1 Billion Worth of LEO Tokens

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Bitfinex

Bitfinex

Bitfinex has revealed plans of selling its asset LEO, which is estimated to be worth $1 billion. Although this might be seen as a bland move, leading analysts have nonetheless warned that it might hurt Bitcoin.

$1 Billion Worth of LEO Tokens

In a report last week by NewsBTC, Dovey Wan, the founder of Primitive Ventures, indicated that Bitfinex had plans of raising over $1 billion through the offering of its branded crypto assets through an on-platform initial coin offering. A section of the crypto community took the news as a joke, stating that it was not possible for the Hong Kong-based crypto exchange to come up with such a strategy after last week’s news indicating that the exchange was in a risky financial and legal standing.

Chinese cryptocurrency investor Zhao Dong published a document that showed that the LEO plan will, however, actually be moving forward. The Block’s Larry Cermak has stated that already, $600 million of the funding has been allocated to private investors who are considered to be industry insiders including Asian venture capital firms and Bitcoin Whales.

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Bitfinex to Use 27% of Profits

The published document shows similarities between LEO and Binance Coin (BNB). Bitfinex plans to use 27% of its profits each month to acquire LEO tokens taken as dividends for holders. Additionally, if the exchange manages to receive $850 million, Bitfinex will be able to buy back LEO using most of the capital. The $850 million would account for the money it is owed from payment processor Crypto Capital and from a hack that lost the exchange thousands of Bitcoin.

Fundstrat’s Tom Lee has suggested that the exchange’s move will be a catalyst for negative price action for BTC. He indicated that $1 billion worth of tokens will affect BTC and other crypto assets because the market will need to absorb an increase in LEO tokens.

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