An online virtual currency trading platform entered into a settlement agreement with Attorney General of the State of New York Letitia James for misrepresenting the company's losses and for falsely claiming that its currency was fully backed by the U.S. dollar ("USD") at all times.
In the settlement agreement, the Office of the Attorney General of the State of New York ("OAG") stated that its investigation found that the company was unable to engage in sufficient banking activity between June and September of 2017, and did not inform its customers that its currency (commonly known as "Tethers") was not fully backed by the USD. The OAG determined that, as a result of the company's reliance on a third-party "payment processor," the company suffered substantial losses and then claimed in a public statement that it knew the whereabouts of the missing funds. At the time of the company's entrance into the settlement agreement, the company was still unsure whether any of the missing funds would be returned to itself or its customers.
To settle the charges, the company agreed to (i) pay $18,500,000 to the State of New York, (ii) an undertaking to cease any trading activity with New Yorkers and (iii) regularly report compliance with this ban to the OAG.