The market was caught by surprise on Thursday when the news broke that New York State Attorney General (NYSAG) is suing Bitfinex and the affiliated firm Tether. NYSAG said that Bitfinex lost possession of $850 million when the money was seized from its ‘partner’ Crypto Capital by the authorities in the U.S., Poland and Portugal, which Bitfinex failed to publicly disclose. Moreover, NYSAG said that some of that money could be irrecoverable.
Despite the significant amount of money at stake, Bitfinex did not sign a contract or formal agreement with Crypto Capital. In order to cover for the seized amount, Bitfinex borrowed approximately $700 million from Tether over three years with a 6.5% interest rate.