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Bitfinex Ordered to Produce Tether Loan Documents in a Few Months

Judge Joel M. Cohen, the judge who has been overseeing the NYAG’s inquiry into Bitfinex and Tether, has extended an injunction requiring the crypto exchange and stablecoin issuer to turn over documents detailing their financial relationship.

The judge made the ruling to produce documents related to the case, which Bitfinex initially refused to supply, and extended the deadline on Thursday, that would have ended in the next few weeks, by 90 days.

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Bitfinex, who shares a parent company with Tether, is accused of using $700 million from the stablecoin reserves to cover up losses of $850 million. 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 this was no fault of Bitfinex.

Giving Bitfinex and Tether more space to comply with the court’s injunction, Cohen did not set a specific date for releasing the documents and left such a decision to a special referee. Further, the referee will determine which documents are pertinent to the case, specifically those that NY Attorney expects to uncover a massive misappropriation of customer and corporate funds. However, the judge hinted that he may not extend the injunction again.

Bitfinex has lost a legal battle to appeal the court decision that effectively killed its attempt to refrain from handing over documents to the New York Attorney General on the grounds of jurisdictional overreach.

Meritless Legal Arguments

Earlier in July, the New York Supreme Court was refused, again, the argument that the US laws do not apply against the popular crypto exchange, which is headquartered in Hong Kong but registered in the British Virgin Islands.

Bitfinex has repeatedly questioned the New York Attorney General’s oversight authority. Making matters worse, says Bitfinex, OAG has proceeded under a statute, the Martin Act, governing securities and commodities, neither of which describes the product bought by the supposed victims here – its stablecoin Tether.

At the time, the attorney responded to Bitfinex’s appeal challenging the Aug 19 verdict that ordered them to cooperate in their ongoing investigations. The NYAG’s filing described the exchange’s arguments as backward, forfeited, and ‘meritless’.

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 last year after the New York Supreme Court modified the substance and scope of the original injunction filed by NY Attorney against Bitfinex’s business.


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