Bitfinex CEO rejected New York’s $850 million loss claim

Bitfinex CEO Jean Louis van der Velde emailed the cryptocurrency exchange’s customers on April 27, 2019, rejecting New York regulators’ allegation that the company had lost access to approximately $850 million held through payment processor Crypto Capital.

Van der Velde described the New York attorney general’s assertions as inaccurate and called the allegation that Bitfinex had lost the money “categorically false.” He claimed that some or all of the funds had instead been seized and safeguarded in Poland, Portugal, the United Kingdom and the United States. That was Bitfinex’s contemporaneous position, not a fact independently established by the April 27 record.

The disputed funds

The letter followed an April 25 filing in New York County Supreme Court by Attorney General Letitia James’s office. The regulator alleged that Bitfinex had placed more than $850 million of commingled corporate and customer money with Crypto Capital without a written contract or comparable assurance. By the filing date, the attorney general said Bitfinex could no longer access those funds.

New York’s papers further alleged that Bitfinex and affiliated stablecoin issuer Tether were controlled by the same small group of people. The regulator said at least $625 million had been transferred from Tether’s account to Bitfinex and that Bitfinex subsequently obtained access to a credit facility of as much as $900 million backed by Tether’s reserves.

Those figures were allegations and investigative findings presented by the attorney general, not final judicial determinations on April 27. Van der Velde’s email likewise offered assurances rather than bank records, seizure orders or an independent accounting that customers could inspect.

What the court had ordered

The signed order restricted Bitfinex and Tether from taking further action to access, lend, pledge or otherwise claim Tether’s dollar reserves while the investigation continued. It also restricted distributions from funds already loaned by Tether and required preservation and production of potentially relevant records.

The proceeding therefore implicated more than a payment dispute between Bitfinex and Crypto Capital. Tether was widely used as a dollar-linked trading instrument, and the attorney general’s filing said more than 2.6 billion tethers were outstanding according to Tether’s website. That figure was the regulator’s event-period snapshot, not an independently audited circulation or reserve measurement.

Van der Velde emphasized that the filed materials were not a civil or criminal complaint and said the companies intended to challenge New York’s assertions. He also claimed they had cooperated with regulators. The court record nevertheless showed that New York had already obtained compulsory restrictions and document-production requirements under its investigation.

Why the response mattered

On April 27, the central uncertainty was whether inaccessible money represented a temporary seizure, as Bitfinex maintained, or a financial shortfall that had been obscured through transactions involving Tether’s reserves, as the attorney general alleged. The distinction affected confidence in both an exchange holding customer assets and a stablecoin marketed around dollar-linked value.

The customer letter did not resolve that uncertainty. Two contemporaneous publications reported receiving or reviewing the email and independently described the same sender, date, monetary claim and named jurisdictions. However, neither the letter nor the accompanying reports supplied the seizure documentation required to verify Bitfinex’s explanation.

What was knowable on April 27

The defensible event-day conclusion is limited: Bitfinex’s chief executive directly challenged New York’s account and assured customers that the approximately $850 million had not been lost, while a signed court order continued to restrict dealings with Tether’s reserves. The status and recoverability of the Crypto Capital funds remained disputed.

No cryptocurrency price, return or trading-volume claim is used here. Contemporary market movements could not, by themselves, establish whether traders believed Bitfinex, whether the funds were recoverable or whether Tether’s reserves were sufficient. Those questions required documentary and financial evidence beyond the April 27 customer communication.