Bitfinex, Tether Claim a Legal “Victory” against the NYAG
The cryptocurrency exchange Bitfinex on May 23, 2019, had a sigh of relief amidst the ongoing Tether (USDT) controversy as it won a partial block on demands for information from the New York Attorney General (NYAG) Office, Bloomberg reports.
A Temporary Respite
Sources state that New York Supreme Court Judge, Joel M. Cohen, allowed a stay of document demands in favor of Bitfinex. Notably, this move vastly limits the scope of the documents that Bitfinex and Tether must produce at the behest of the NYAG.
Justice Cohen also set a hearing date of July 29, 2019, for the two parties to appear for a hearing that would consider limiting all requests for information from Bitfinex. He added that in the meanwhile the bench will also ponder over Bitfinex’s request to dismiss the legal suit altogether.
Unsurprisingly, Bitfinex lauded the New York Supreme Court’s decision dubbing it a “victory” in its ongoing battle against the NYAG. The exchange claimed that the court’s decision further cemented its assertion that the NYAG’s legal offensive was void of legal reasoning.
The exchange wrote in a blog post:
“This order is another victory in the ongoing defense of our businesses against the New York Attorney General’s overreach, and it comes on the heels of Justice Cohen’s ruling last week granting our motion to significantly narrow the injunction against our businesses obtained by the Attorney General.”
“We look forward to continuing to challenge the New York Attorney General’s unmeritorious claims, and we will continue to vigorously protect our customers and assert our rights against those making false and unsupported claims against us.”
The Story Until Now
Bitfinex recently found itself in the midst of a controversy when the NYAG Office accused it of colluding with its closely held affiliate firm Tether to inappropriately cover a business loss of more than $850 million. On April 26, 2019, NYAG representative Letita James said that she had lanced a court order against iFinex Ltd., the parent concern of the two accused companies.
In response, iFinex Ltd. stated that the regulatory body had no jurisdiction in the matter as Bitfinex’s registered office was in the British Virgin Islands. Further, the Hong Kong-based firm said that as U.S. residents were not allowed to trade on the exchange, the NYAG office had no legal ground to sue it.
Most recently, Bitfinex was successful in raising $1 billion through its initial exchange offering (IEO) through private placements from institutional investors. However, skeptics worry about the timing of such a development as it comes at a time when the exchange is said to be battling a serious liquidity crisis.