(Bloomberg) -- The crypto exchange Bitfinex reached a settlement with New York Attorney General Letitia James over allegations that it hid the loss of comingled client and corporate funds.

Without admitting or denying any wrongdoing, the officials who control Bitfinex and the affiliated stablecoin Tether, agreed to pay $18.5 million, the state attorney general’s office said in a statement on Tuesday. New York officials, who originally began investigating Bitfinex in 2019, will receive quarterly reports on composition of Tether’s reserves for the next two years.

“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” James said in the statement. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.”

The agreement sheds some light on one of the most controversial areas of the cryptocurrency market, where trading has been dominated by loosely regulated exchanges around the world. About 55% of all Bitcoin purchases are conducted with Tether, according to researcher CryptoCompare.

The use of Tether has ballooned since New York began the investigation, with the stablecoin’s market capitalization growing to about $36 billion from less than $5 billion during that time. Many of the other major crypto exchanges such as Binance also use Tether, saying it helps provide liquidity and can be used to facilitate transactions between different digital coins and tokens. Unlike other currencies such as Bitcoin that are “mined,” Tether officials say they create new coins based on customer orders. That had led to speculation that Tether was being used to lift the price of Bitcoin, an allegation Bitfinex officials dispute.

The settlement is the latest turn in a long-running saga involving more than $850 million in lost funds. In April 2019, New York’s top cop said that Bitfinex failed to disclosed that it entrusted more than $1 billion of comingled client and corporate funds to a Panamanian firm, Crypto Capital Corp.

Tether had also claimed that it was backed one-to-one by the dollar, though it later said in a filing that figure was actually around 70%, raising concern about the claim.

“The settlement amount we have agreed to pay to the attorney general’s office should be viewed as a measure of our desire to put this matter behind us and focus on our business,” Stuart Hoegner, general counsel for Bitfinex and Tether, said in a statement.

New York officials had said they pursued the action because state residents were defrauded. Bitfinex says most of its companies are registered in the British Virgin Islands. Hoegner’s LinkedIn profile says he’s based in Toronto.

Bitfinex and Tether said they’re still working to recover funds lost when Crypto Capital was shut down. Funds were seized by government agencies in countries such as Poland and Portugal as part of investigations into Crypto Capital. Some of the funds may have been lost, the companies said.

Last month, Bitfinex said it repaid a remaining balance of $550 million on a loan that was at the heart of the attorney general’s allegations of fraud.

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