NY Attorney General has Jurisdiction Over Bitfinex Probe: Court

Tuesday, 20/08/2019 | 07:33 GMT by Arnab Shome
  • The judge gave the crypto companies another 90 days to turn over all requested documents.
NY Attorney General has Jurisdiction Over Bitfinex Probe: Court
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Bitfinex and Tether must continue handing over documents regarding an alleged $850 million cover-up to the New York Attorney General (NYAG), a judge ruled on Monday.

According to the ruling, the firms will need to publish information about a $700 million line-of-credit that Tether gave to Bitfinex.

The ruling denied the defendants' request to dismiss the charges entirely as they questioned the jurisdiction of the NYAG over the business of the British Virgin Islands-registered companies.

“The Court disagrees with the Petitioner that it is (or can be) premature for the Court to determine whether it has jurisdiction to issue orders impacting the rights of Respondents in this proceeding,” New York Supreme Court Judge Joel M. Cohen stated.

“That said, the Court finds based on the evidence and applicable law that it has jurisdiction – and a clear statutory mandate – to adjudicate this matter. Accordingly, Respondents’ motion is denied, and the temporary stay of the investigation is dissolved.”

A tainted loan to cover up hundreds of millions in losses

The investigation into the crypto companies began in April when the NYAG’s office first alleged that the cryptocurrency Exchange covered up an $850 million loss incurred by its payment processor Crypto Capital. In the process, Bitfinex turned to Tether to obtain a line-of-credit of $700 million. An injunction issued in May froze the possibility of further lending as another $200 million were about to flow from Tether to Bitfinex.

The fresh ruling gives the two firms another 90 days to turn over the documents to the New York prosecutor. The injunction would expire on October 14.

Meanwhile, the defendants claimed that they spent $500,000 and appointed 60 lawyers to find documents asked for by the NYAG’s office. In response to that, the NYAG revealed the nature of the demanded documents to the court and stated that all the documents were necessary for business operations and should be at the “fingertips” of the companies.

Bitfinex and Tether must continue handing over documents regarding an alleged $850 million cover-up to the New York Attorney General (NYAG), a judge ruled on Monday.

According to the ruling, the firms will need to publish information about a $700 million line-of-credit that Tether gave to Bitfinex.

The ruling denied the defendants' request to dismiss the charges entirely as they questioned the jurisdiction of the NYAG over the business of the British Virgin Islands-registered companies.

“The Court disagrees with the Petitioner that it is (or can be) premature for the Court to determine whether it has jurisdiction to issue orders impacting the rights of Respondents in this proceeding,” New York Supreme Court Judge Joel M. Cohen stated.

“That said, the Court finds based on the evidence and applicable law that it has jurisdiction – and a clear statutory mandate – to adjudicate this matter. Accordingly, Respondents’ motion is denied, and the temporary stay of the investigation is dissolved.”

A tainted loan to cover up hundreds of millions in losses

The investigation into the crypto companies began in April when the NYAG’s office first alleged that the cryptocurrency Exchange covered up an $850 million loss incurred by its payment processor Crypto Capital. In the process, Bitfinex turned to Tether to obtain a line-of-credit of $700 million. An injunction issued in May froze the possibility of further lending as another $200 million were about to flow from Tether to Bitfinex.

The fresh ruling gives the two firms another 90 days to turn over the documents to the New York prosecutor. The injunction would expire on October 14.

Meanwhile, the defendants claimed that they spent $500,000 and appointed 60 lawyers to find documents asked for by the NYAG’s office. In response to that, the NYAG revealed the nature of the demanded documents to the court and stated that all the documents were necessary for business operations and should be at the “fingertips” of the companies.

About the Author: Arnab Shome
Arnab Shome
  • 6420 Articles
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About the Author: Arnab Shome
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
  • 6420 Articles
  • 85 Followers

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