UNITED STATES (VOP TODAY NEWS) — According to court documents received by The Block, Tether invested part of its funds in Bitcoin, as well as in other assets, including “cash and cash equivalents”.
— The Block (@TheBlock__) May 21, 2019
At the end of April, the New York Prosecutor General’s Office charged Bitfinex with the fact that, having suffered a loss of $ 850 million, it concealed this fact, using the funds of its affiliated company Stebcocoin Tether to cover the damage.
Shortly before this, Tether quietly updated the USDT tokens security policy . According to the updated edition, the company’s stableblocks can be provided with “reserves, which include traditional currency and cash equivalents, as well as, from time to time … other assets and forthcoming proceeds from loans that Tether has provided to third parties.” At the same time, the company stressed that each token is still pegged to the American dollar in a 1: 1 ratio.
According to the minutes of the court hearing of May 16, Bitfinex lawyer David Miller stated the following:
“Tether really invested in cash and cash equivalents, including Bitcoin”
Also during the hearing, Miller complained that the Attorney General of New York restricts Tether in investment activities.
In turn, the New York judge Joel M. Cohen questioned the logic of the company, finding a contradiction in investing steylkoinov in highly volatile assets, like Bitcoin.
“Tether seemed to me like a lull after a storm of cryptocurrency trading. But if Tether is backed by Bitcoin, how does this all fit in? ” Cohen asked Miller.
He replied that only a small amount had been invested. Also, according to him, according to the updated Tether collateral policy, collateral is allowed not only in cash and cash equivalents, but also in other assets.
Recall, the Supreme Court of the State of New York upheld restrictions on the use of reserves of Tether Limited for the investment activities of other companies, in particular the Bitfinex stock exchange.
Also, Bitfinex cannot use Tether assets for lending or for other needs, “if this is not required by normal business practices”. In addition, Tether is forbidden to provide funds from its reserves to employees, unless it is a question of salaries and standard payments.
At the same time, the ruling states that Tether can invest its reserves in the ordinary course of business. The company had already stated at the previous court session that it had used its reserves for investment purposes, but it was not known what investments we were talking about.
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