Cryptocurrencies shed $10 billion in an hour on worries over ‘stablecoin’ tether

A visual representation of the cryptocurrency Bitcoin on November 20, 2018 in London, England.










Jordan Mansfield | Getty Images News | Getty Images

A visual representation of the cryptocurrency Bitcoin on November 20, 2018 in London, England.

Cryptocurrencies fell amid reignited regulatory worries and questions around the legitimacy of so-called “stablecoin” tether.

accused the operator of bitcoin exchange Bitfinex and tether issuer Tether Limited of hiding an $850 million loss.

The state’s top lawyer alleges Bitfinex used at least $700 million from Tether’s cash reserves to cover up the apparent loss of $850 million of client and corporate funds. Its findings were detailed in papers filed with the Manhattan Supreme Court.

Tether is a cryptocurrency that is meant to be pegged to the U.S. dollar — otherwise known as a stablecoin. Worries have been raised over whether Tether Limited holds enough dollars to back all the tokens in circulation.

The price of bitcoin, the world’s largest cryptocurrency, has fallen 4% over the last 24 hours, according to industry website CoinDesk. In the same time period, the prices of ethereum and XRP — the world’s second and third-largest virtual currencies by market value — also dropped 6% and 3%, respectively. Tether’s price fell over 1%, coming off its dollar peg.

The attorney general’s office said Thursday that Bitfinex handed $850 million to a Panama entity called Crypto Capital without disclosing it to investors. Executives at Bitfinex and Tether then allegedly “engaged in a series of conflicted corporate transactions” — where Bitfinex gave itself access to Tether’s cash reserves.

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