Bitfinex Wins Appeal vs NYAG’s Demand to Deliver Tether Documents

Bitfinex is accused of using $700 million from Tether reserves to cover up losses of $850 million.

Crypto exchange Bitfinex won a court battle against the New York Attorney General’s office that allows the company to refrain from handing over documents of an alleged $850 million cover-up pertaining to the Tether cryptocurrency.

Earlier in August, the NY district court denied a motion filed by iFinex, the parent company of Bitfinex, to dismiss the NYAG’s lawsuit against the company. As such, the New York Supreme Court’s decision today leaves the crypto community puzzled over the impact on the attorney general’s chances to continue its investigation.

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Today’s victory helps Bitfinex further and denies the NYAG’s request to turn over the documentation about the loan and line of credit that Tether provided to its sister cryptocurrency exchange.

“We are gratified by the panel’s decision and we look forward to addressing the significant substantive issues before the appellate court,” a representative of iFinex told Forbes.

Bitfinex and Tether saga continues

US authorities have stepped up their enforcement against crypto firms with the NY attorney investigating them for fraud because of duplicitous statements about the digital tokens’ backing. Specifically, Bitfinex is accused of using $700 million from Tether reserves to cover up losses of $850 million.

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The New York Supreme Court earlier refused the argument that US laws do not apply to the popular crypto exchange, which is headquartered in Hong Kong but registered in the British Virgin Islands.

The court confirmed that the State’s Attorney General has sufficient authority to investigate the activities of iFinex—which owns both Tether and Bitfinex— and ordered the controversial affiliated firms to turn over financial documents related to an alleged $850 million fraud.

The ruling not only grants the crypto-adverse attorney general jurisdiction over Bitfinex’s broader activities but also eliminated the stay imposed on the NYAG in May after the New York Supreme Court modified the substance and scope of the original injunction filed by NY Attorney against Bitfinex’s business.

At the time, Bitfinex released a statement challenging the New York Attorney’s accusations, arguing again that the court filings were an overreach.

The crypto exchange defended itself saying the money was deposited with a Panamanian-company called Crypto Capital but then was seized and safeguarded in several jurisdictions, including Poland, Portugal, the UK, and the United States, all through no fault of Bitfinex. Based on these arguments, lawyers for the companies have asked for the case to be dismissed.

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