Following claims that the Bitfinex exchange was hiding an $850 million shortfall using the US-dollar pegged Tether stablecoin, the cryptocurrency market has been shaken up despite seemingly being in a bullish state over the past few weeks.

In a recent statement by the New York Attorney General’s office claims that Bitfinex lost around $850 million and used customer and corporate funds from the affiliated stablecoin operator Tether in a coverup.

The allegations seem to have affected Tether’s peg to the US dollar too. Not just that but the market confidence has been shaken up and has been the catalyst for an overall sell-off with bigger cryptocurrencies by market cap like Ethereum and Ripple’s XRP being down 5 percent and 2.13 percent respectively.

“Based on data from CoinMarketCap, the overall crypto market’s capitalization dropped by $10 billion to as low as $167 billion around early Friday morning UTC time, and has since then climbed back above $172 billion as of press time.”

On Thursday, the price of Tether started falling from it’s $1 price to $0.955 according to data from Kraken and OKCoin exchanges.

As reported by Sebastian Sinclair from CoinDesk:

“The USDT price has since then climbed back and is currently changing hands around $0.97 on both Kraken and OKCoin, and may see further price uncertainty as the day continues to develop. Other stablecoin assets such as USDC, TrueUSD and GUSD are all in the green up between 0.25 and 3 percent as a result of shifting investor funds toward some of the other more regulated alternatives.”

Negative Reaction

Basically, the markets have been hit with a negative motion with most cryptocurrencies bleeding red this morning.

According to the Twitter service Whale Alert, which monitors blockchain transactions, after the news broke, “3,999 bitcoin, which was worth $20 million, got moved out from Bitfinex’s exchange wallets to unknown addresses.”

These kinds of recent moves are indicative of trader’s sentiment who are currently looking to reduce the risk by transferring funds away from the Hong Kong-based exchange.