In what seems like a historic moment in crypto, the New York state attorney general’s office has announced that it is investigating iFinex, the company behind exchange Bitfinex and stablecoin Tether, over an alleged $850 million fraud.

Attorney General Letitia James’ office said on Thursday that it is looking at how the company (apparently) lost $850 million, which is said to have gone missing through a deal with Panama-based Crypto Capital. iFinex reportedly selected Crypto Capital as a payment processor to handle customer payouts after a series of banks refused to do business, including Wells Fargo, which had previously taken transfers from its Taiwan-based accounts.

When it became evident that the money wouldn’t be returned, iFinex is said to have taken “at least” $700 million from the reserves that (apparently) back Tether, which is pegged against the U.S. dollar. The deal was not declared to investors.

“Those transactions treat Tether’s cash reserves as Bitfinex’s corporate slush fund, and are being used to hide Bitfinex’s massive, undisclosed losses and inability to handle customer withdrawals,” Attorney General James’ office argued in a release.

iFinex also stands accused of allowing New York-based investors to use Bitfinex to trade Tether without holding a license to operate in the state of New York.

In response, iFinex has claimed that “the New York Attorney General’s court filings were written in bad faith and are riddled with false assertions.”

“We have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers,” the company said in a statement.

Tether and Bitfinex have long attracted suspicion within the crypto space and beyond. Tether has been accused of moving the market by printing new tokens. It’s somewhat ironic, then, that news of the investigation sent crypto prices down.

At the time of writing, the price of Bitcoin is down four percent over 24 hours, while Ethereum is down six percent. In fairness, given the scale of the alleged fraud, and involvement of a branch of the U.S. government, those losses seem quite minimal.

The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.