Bitfinex Vs NYAG : Accused on the Verge of Winning


New reports have surfaced about the on-going legal battle involving Cryptocurrency exchange Bitfinex and stable coin giant Tether (USDT). Bitfinex have been previously accused by the New York Attorney General’s office (NYAG) of covering up a loss of about $850 million both in client and corporate cash, by borrowing a sum of $700 million from its subsidiary Tether.

Recent reports state that the company has now won a ‘stay’ motion against the NYAG.  This means that the company won’t have to disclose any documents related to the alleged loss and the various arrangements between the two parties (Bitfinex and Tether). In a court order acquired by cointelegraph on September 24, the justices of the appellate court David Freidman, Peter Tom, Troy Webber, Ellen Gesmer and Jeffrey Oing have overruled the previous motion which demanded all information regarding the entire transaction.

An on-going legal battle since April

The case was initially filed in April by the NYAG’s office; General Letitia James accused Bitfinex of covering up their $900 million loss to their panama-based payment processor Crypto Capital. She had then claimed that:

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds.”

According to earlier reports, Bitfinex claims that crypto capital notified the exchange in 2018 that the funds they were keeping were partially seized by government bodies in U.S, Poland, and Portugal. At that point, these funds were expected to be released within a short span of time, but Bitfinex believed that “Crypto Capital might fail to return the funds.”

To fill up the gap in the books, Bitfinex engaged in a series of transactions with its sister company Tether. The entire event wasn’t disclosed to the investors until the NYAG’s office filed a lawsuit against Bitfinex and its affiliate Tether. The attorney general further revealed that her office had acquired a court filing which stated that both the parties were in violation of New York law and that Bitfinex hadn’t disclosed these losses to its investors.

The accused have till November 4

The case is not over yet, as the accused parties need to “perfect its appeal” before November 4 or else they might have to comply with the entire investigation. Stuart Hoegner, general counsel of Bitfinex and Tether, mentioned in an email to media outlet Decrypt:

“We are gratified by the panel’s decision and we look forward to addressing the substantive issues before the appellate court.”

Anna Larsen
Anna Larsen has been a Crypto enthusiast since 2016. Fascinated by the technology and its usecases she decided to pursue a career in content creation related to this space. The journey has been exciting ever since.

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