Bitfinex, the fifth-largest cryptocurrency exchange by volume, has reportedly repaid the remainder of a $750 million loan balance with stablecoin issuer Tether. 

The exchange told The Block today that it paid $550 million to Tether in January, after having paid back $100 million in each of the previous two years.

Bitfinex, which shares key leadership with Tether, took out the line of credit in 2018 after alleging that its payments processor, Crypto Capital, stole $850 million. The New York Attorney General’s (NYAG) office has been probing the loan since 2018 on suspicion that Bitfinex was essentially lending itself money to cover up that loss. Crypto Capital itself stands accused of money laundering.

As the NYAG explained in April 2019: 

“In order to fill the gap, executives of Bitfinex and Tether engaged in a series of conflicted corporate transactions whereby Bitfinex gave itself access to up to $900 million of Tether’s cash reserves, which Tether for years repeatedly told investors fully backed the tether virtual currency ‘1-to-1.’” 

As Bitfinex general counsel Stuart Hoegner told The Block, the exchange had a “short-term need for cash, and Tether was prepared to lend on commercially reasonable terms.”

The New York Attorney General’s argument is that using Tether reserves in this way would constitute fraud. Early in the investigation, Tether conceded in March 2019 that it wasn’t totally backed by real US dollars, but also by “cash equivalents” and sometimes “other assets and receivables.” 

The loan repayment doesn’t mean Tether and Bitfinex’s legal troubles are over. 

Willamette University College of Law professor Rohan Grey, who also serves as Vice Chair of the Digital Currency Global Initiative, riffed on the old crypto adage of “don’t trust, verify,” telling Decrypt there was no reason to trust that Bitfinex had repaid the loan given its previous dodginess about whether Tethers were fully backed by US dollars. He admitted, though, that given the bullish state of the cryptocurrency markets, it’s plausible.

“However, even if repayment did occur as alleged, it would be a serious mistake to adopt an ‘all’s well that ends well’ view of what transpired,” said Grey. “The core concern—that Tether’s assets are not fully backed—remains, and its opaque relationships with Bitfinex and Deltec remain ethically and legally problematic.”

“I don’t know why you keep complaining that I embezzled funds, after all, I returned them when I didn’t need them anymore!” https://t.co/3EzlYd4PHV

— Rohan Grey (@rohangrey) February 5, 2021

“Deltec” refers to Deltec Bank & Trust, an international bank based in the Bahamas that counts at least one other crypto exchange among its clients. Though rumors have swirled that Bitfinex holds an ownership share in Deltec—and that Deltec is holding Bitcoin reserves for Bitfinex—Deputy CEO Gregory Pepin told journalist Laura Shin last month that these are untrue.

Tether has yet to respond to a request for comment.