Tether’s questionable relationship with Bitfinex, and the ongoing drama between the two and the New York Attorney General’s Office (NYAGO), has caused additional fallout. Metropolitan Commercial Bank, a financial institution based in New York, has contacted Tether and requested that it close its accounts at the bank. The decision follows a revelation by the NYAGO in court that Tether held accounts at both Metropolitan and Signature Bank.
Coindesk was able to speak with someone at Metropolitan, who said in an email, “Metropolitan Commercial Bank had limited, corporate operating accounts with Tether Holdings LTD, iFinex Inc, and Digfinex Inc, all with negligible activity, and requested the accounts to be closed after less than 5 months of the accounts being opened.”
Coindesk reportedly tried to get a response from Signature, but was only told that the bank doesn’t comment on customer-related issues.
New York Attorney General (AG) Letitia James is going after Tether and Bitfinex, accusing them of defrauding New Yorkers as they attempted to cover up losses amounting to $850 million. James has filed supporting documentation that shows activity of the two entities that is, according to the AG, suspect as the case continues to be heard by a New York court judge.
It has been shown that Tether provided the money to Bitfinex after the latter suddenly found itself short when its payment processor, Panama-based Crypto Capital, had funds seized. The seizure was not reported by Bitfinex and neither company reported the loan agreements.
Among other issues that have the AG concerned are the fact that Tether and Bitfinex have reportedly issued unsecured loans to investors and the assertion by Tether that each digital token is backed by one US dollar.