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Op Ed: NYAG vs. Bitfinex / Tether Summary



In an ongoing legal dispute between the New York Attorney General (NYAG), the decryption trading Bitfinex and the stablecoin issuer Tether, the New York Supreme Court amended the temporary injunction on April 24, 2019, and now Bitfinex is paying Balance that you have borrowed to maintain normal business processes. However, Bitfinex can not withdraw additional funds from the Tether Reserve and must comply with all document requests pursuant to the NYAG investigation. This amended preliminary injunction went into effect on May 16, 2019 and lasts for 90 days.

History of Conflict

April 24, 2019 The Office of Commercial, New York State Department of Commerce, was ordered by the Office of the Attorney General (OAG) to require Bitfinex / Tether to provide information under the Martin Act. The court held that a preliminary injunction ordering Bitfinex / Tether to no longer violate Martin's law, including the use of devices, plans or tools to engage in "fraudulent, deceptive or unlawful acts" , Or "promise."

Bitfinex / Tether has not warned the OAG despite intimate communication with them and has pleaded with the court to amend the order. There was a hearing on May 6, 2019 and the court found that Bitfinex / Tether needed to show more evidence, but agreed that the pre-order had to be amended as well.

The primary concern brought to court is that on February 21, 2019, OAG found that Bitaginex is considering a transaction in which Bitfinex can withdraw the Tether's cash reserves as needed. The OAG expressed serious concern about the viability of Bitfinex and whether it could be repaid to Tether stores for "borrowed" money. Bitfinex / Tether ignored these concerns and made a paperwork with Tether's reserves for a $ 900 million credit line and notified OAG on March 29, 2019, two days later. This line of credit (line-of-credit documents) was actually an attempt to get ducks in succession since the $ 625 million was already borrowed in November 2018, as it turns out. The loan had Tether at $ 150 million, and the NYAG suspected that the loss could disappear at any time. Bitfinex / Tether was, strictly speaking, an appropriate length trade.

As a result, on April 24, 2019, the court received a document ordering and prohibition order, and Bitfinex forbade access to the Tether reserves for any reason.

It appears that the court has received a number of documents requested by Bitfinex / Tether, which was the primary purpose of issuing the injunction. So, on May 16, 2019, the court corrected the injunction. The court noted that the New York Business Law and the Martin Act prohibit command powers beyond the scope of document production. "[the applicable law] The Martin Act does not provide Robert's mandate to regulate commercial activity by objects or objects of investigation. "

The court found that the NYAG had enough evidence to meet the very high standards Bitbinex / Tether needed for a preliminary injunction that prevented the dollar from continuing to flow out of the reserves of the tether during the investigation. The court has amended the Temporary Protective Order to protect the public and protect Bitfinex / Tether against unnecessary business restrictions. The initial temporary restraining order was ambiguous and overly broad, but not a preliminary one. It prevents Bitfinex / Tether from "preventing further legal violations or fraud."

Order May 16

The court amended the preliminary injunction to not deter Bitfinex / Tether from normal business activities. Now Bitfinex / Tether and its agents

  • Use of Bitfinex's Tether Reserves
  • Distribute or distribute to senior employees of Bitfinex / Tether using funds already borrowed from the reserves of Tether (payment not included in the normal business process such as payroll, vendor, consultant, contractor payment, etc.)
  • Directly or indirectly manipulating or destroying any evidence (including long documents / communications lists) or other information requested by the NYAG on November 27, 2018 or February 26, 2018, either directly or indirectly (which may be typographical errors); I think the court means 2019.) Request a document.

This preliminary injunction will last for 90 days from May 16, 2019.

According to Paolo Ardoino, CTO, Bitfinex has personally raised $ 1 billion over 10 days.

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


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