Bitfinex and Tether have somewhat of a murky relationship, with many accusing the duo of manipulating crypto markets. At the start of 2019, Bitfinex suffered a massive blow to its finances after its payment processor – Crypto Capital – had its bank accounts frozen in multiple countries around the world. This created an $850 million hole in Bitfinex’s accounts, and it reached out to its close friend Tether for a short-term loan in order to balance its books.
A Scandalous Affair
All good crypto love stories begin with a torrid affair, with Bitfinex and Tether sticking true to the script. Back in April, the New York Attorney General (NYAG) accused Bitfinex and Tether of using client funds to cover business losses. The NYAG then demanded that the pair cut all ties and stop colluding on projects. However, Bitfinex hit back saying that terminating the partnership could hurt customers. With $850 million of customer funds missing thanks to Crypto Capital having their accounts frozen, it would leave customers with significantly smaller account balances.
Tether Rebalancing its Accounts
Tether hasn’t had an easy ride, and scandals like the Bitfinex loan situation haven’t helped its cause in any way, shape or form. Back in October 2018, Tether decided to burn more than half of all USDT in circulation as it looked like Tether was on the brink of collapse. Then – out of the blue – a couple of weeks later Tether announced a new banking partnership that would help it get back on its feet. Following that, Tether then updated the wording on is website to finally admit everything the crypto world already knew – that USDT isn’t 100% backed by fiat.
All Debts Settled
Under the terms of the loan that Bitfinex took from Tether, it wasn’t required to make the final payment for some months. However, after a highly successful second quarter Bitfinex decided to clear all of its debts and pay back Tether early – including all interest accrued to date. This means that Bitfinex is 100% solvent again and Tether owns no debt in its best bud crypto exchange.
Hopefully this is the beginning of the end of the two crypto giant’s murky relationship. The NYAG would be much happier if the two decided to part ways now the debt has been repaid, but as multiple board members of the two projects remain the same – not to mention owners – it’s likely we won’t see this even happen.