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Op Ed: Summary NYAG vs. Bitfinex / Tether



In the most recent legal dispute between New York State Attorney (NYAG), Bitfinex Curter Exchange and issuer of Tether stabilcoin publisher, New York's Supreme Court revised the preliminary ban on April 24, 2019, and now Bitfinex is allowed to continue using the Reserve who are hired for regular business operations, such as paid employees and consultants. But Bitfinex can not retract additional assets from the Tether reserve and must comply with all document requests in accordance with the NYAG investigation. This amended provisional measure entered into force on 16 May 2019 and will last for 90 days.

The history of the dispute

On April 24, 2019, the Office of the Supreme Court of the State of New York, a commercial department, issued a warrant filed by the State Attorney's Office (KGR) requesting Bitfinex / Tether to submit information under Martin's law. The Court approved a temporary ban on Bitfinex / Tether's restriction of further breach of Martin's act, including participation in "fraudulent, deceptive or illegal acts" and "the use of any device, scheme or skill to deceive or gain money or property through fraudulent manipulation, presentation or promise. "

Bitfinex / Tether complained that KGR did not give any warning, although it was in close communication with them, and asked the court to alter the order. There was a hearing on 6 May 2019, and the court found Bitfinex / Tether needed to produce some more evidence, but agreed that the preliminary measure should be amended.

The prime concern expressed by the court is that on February 21, 2019, KGR learned that Bitfinex was considering a transaction that would allow Bitfinex to withdraw Tetera's reserve funds as needed. KGR is seriously concerned about the viability of Bitfinex and whether the money it has "lent" can ever repay Tetra's reserves. Bitfinex / Tether ignored these concerns and established a paperwork for a $ 900 million credit line with Tether's reserves and informed KGR two days later, March 29, 2019. As it turned out, $ 625 million was already borrowed in November 2018. It appeared that this credit line documentation was an attempt to bring the ducks into line after the facts. The credit left Tetra in $ 150 million reserves, and NYAG suspected that it might disperse at any time. Bitfinex / Tether firmly argued that it was a transaction that took place in his hands.

This led to the court ordering the document and the ban on April 24, 2019, forbidding Bitfinex to access Tether reserves for any reason.

It appears that the court has received many documents requested by Bitfinex / Tether, which was the primary purpose of the ban. So on May 16, 2019, the court changed the ban. The Court noted that the certification powers under the New York Trade Act and the Martina Law were limited beyond the scope of compulsory creation of documents: "[the applicable law] does not provide a cunning mandate to regulate commercial activities with subjects or Martina Acta's investigation goals. "

The Court found NYAG sufficiently demonstrated to meet the very high standards required for a temporary ban which would prevent Bitfinex / Tether from allowing the dollars to leave the Tethere reserve while the investigation was resumed. The Court revised a provisional provision to establish a balance between public protection and Bitfinex / Tether protection from unnecessary business restrictions. It was established that the temporary ban was ambiguous, excessive and not preliminary as it did not have an end point. This has prevented Bitfinex / Tether from "further violations of law or fraud."

Red May 16

The court has renamed a temporary ban not to restrict Bitfinex / Tether from regular business activities. Bitfinex / Tether and their agents are now banned

  • Any use of Tether's reserves by Bitfinex
  • Executing any distribution or dividend of any of the senior Bitfinex / Tether associates by means of funds already leased from the Tether reserve (this does not include regular payments, such as payroll, payment to suppliers, consultants, contractors, etc.). )
  • Direct or indirect manipulation or destruction of any evidence (including long list of documents / communications) or other information required by NYAG on November 27, 2018 or February 26, 2018 (this may be a mistake in writing, I think the court meant 2019) document requests.

This temporary ban will last for 90 days starting on May 16, 2019.

Meanwhile, it appears that Bitfinex has collected a billion dollars privately for 10 days, according to his CTO, Paul Ardoin, on Twitter.

This is the opus of Sasha Hodder. The opinions expressed are her own opinions and do not necessarily reflect the opinions of Bitcoin Magazine or BTC Inc.


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