On April 25 2019, news broke about the New York Attorney General’s probe into Bitfinex and documents revealed up to $850m had been “loaned” from Tether to Bitfinex in order to cover up a loss of “frozen funds”. It revealed that Tether is only backed up to 75% by cash and “securities”, meaning there isn’t enough money to honour its 1:1 peg. Panic ensued as traders rushed to pull their money out of Bitfinex.

Bitfinex has seen a large net outflow of crypto withdraws since then: