Investing.com - The major cryptocurrencies traded in the green on Thursday morning in Asia. Meanwhile, further investigation by the New York regulators revealed that stablecoin Tether is not backed 100% by cash anymore.
Bitcoin gained 2.81% to $5,375.6 by 12:24 AM ET (04:24 AM GMT).
Ethereum added 1.77% to $160.38, XRP edged up 0.08% to $0.30211, and Litecoin rose 5.02% to $73.173.
The total market cap bounced back to $175 million from $169 billion two days ago.
Crypto traders continued to keep an eye on the investigation into major Bitcoin exchange Bitfinex for fraud. Controlled by the operators of Bitfinex, Tether is a stablecoin that is supposed to be backed by the value of the U.S. dollar on a 1:1 ratio. But the latest development revealed otherwise.
On Tuesday, Stuart Hoegner, the general counsel to Tether and Bitfinex, filed an affidavit with the Supreme Court of the State of New York and revealed that only 74% of Tether’s holdings are backed by cash.
“As of the date [April 30] I am signing this affidavit, Tether has cash and cash equivalents (short term securities) on hand totalling approximately $2.1 billion, representing approximately 74% of the current outstanding tethers,” the affidavit read.
The investigation started when the New York state attorney general’s office announced a court order against Bitfinex for fraud last week.
“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds,” said Attorney General Letitia James.
The Attorney General said that Bitfinex has already taken at least $700 million from Tether’s reserves and the transactions have not been disclosed to investors.
“Those transactions … treat Tether’s cash reserves as Bitfinex’s corporate slush fund, and are being used to hide Bitfinex’s massive, undisclosed losses and inability to handle customer withdrawals,” the statement read.
Subsequently, crypto automated teller machine operator CoinFlip said today it has postponed support for Tether “until a later time”.
“CoinFlip's number one priority is making sure our customers are safe, so we always err on the side of caution. We need full assurance that [Tether] is stable, and that Tether and Bitfinex are fully abiding by U.S. law. I truly hope that is the case.” CoinFlip CEO Daniel Polotsky told crypto news outlet Cointelegraph.