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New York Bids Adieu To Tether And Bitfinex

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Cryptocurrency trading in the United States of America, especially New York has been comparatively tougher than it is in other countries as well as states. Several crypto platforms have been rolling out trading platforms exclusively for the citizens of the US. However, the state seems to be stringent particularly with platforms that have had a bad past. Bitfinex as well as the stablecoin, Tether seem to be reaping the mistakes of their past.

Bitfinex’s parent company iFinex’s tiff with the New York State has been going on for about two years now. Earlier this week, the case sought a conclusion through a settlement, which coerced the platform to get out of the American state.

New York State Attorney General Calls Out Bitfinex And Tether

On Tuesday, the New York Attorney General Letitia James revealed that the iFinex case had finally come to an end. Both Bitfinex and Tether reportedly agreed to pay a fine of $18.5 million. With this, both these platforms were required to stop any trading activity in the state.

The Attorney General of the state further said in her statement that both the parties had “recklessly and unlawfully” concealed major damages to prolong their scheme.

The statement read,

“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”

Just when the crypto industry is moving past its nascent stage in terms of adoption, Bitfinex and Tether would be losing a major region.

Attorney James even went on to tweet about the latest event and stressed the fact that those who engage in activities surrounding crypto would be subject to laws of the state. The tweet read,

Furthermore, New York Attorney General James suggested that this case and its legal repercussions could be used as a message against “corporate greed”.

New York Supreme Court Summons Bitfinex For Video Conference

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With scams and attacks having found a place in the crypto-verse, the involvement of law enforcement is inevitable. While some cases have been put to rest, a few others continue to seek justice in court. One such ongoing case between Bitfinex’s parent company iFinex and the New York Attorney General [NYAG]. As per recent updates pertaining to the case, both the parties involved will reportedly have a conference with the New York Supreme Court.

NYAG Seeks Video Conference With Bitfinex

On Wednesday, the New York Attorney General urged Joel M. Cohen, Judge of the Supreme Court in New York to carry out a video conference with iFinex. NYAG’s latest request follows iFinex’s negligence in producing the documents that the court had previously ordered. The court went on to affirm the video conference and scheduled it for 17 September 2020 at 11:00 AM.

iFinex, Bitfinex, and Tether were subject to immense scrutiny following the cover-up of $850 million funds that were lost. The case has been in court since April 2019 and iFinex has failed to submit documents that were essential for the case. While the NYAG claims that certain documents were key to the ongoing case, iFinex wanted the court to decide otherwise. Back in July, rejecting iFinex’s appeal, the court ordered that Bitfinex, as well as Tether, had a total of 60 days to present the required documents.

Since the crypto platform failed to do so, the NYAG went on request a video conference in light of the same. The filing read,

“At the conference we seek, the OAG will request that the Court order the immediate production of documents and information by Respondents [….]”

The Supreme Court further pointed out that the link to the forthcoming video conference would soon be presented to counsel before the conference. The court order further read,

“The parties are directed to submit letters to the Court, no more than 3 pages in length, outlining their positions on the issues raised above. The letters should be filed on NYSCEF on or before September 14.”

Court Rejects Bitfinex-Tether Appeal over Lost $850 Million Client Funds

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Bitfinex, the popular digital currency trading platform, now faces state claims that it hid $850 million of corporate-client funds in a cover-up between itself and Tether. This comes after the exchange lost an appeal to the appellate divisions of the Supreme Court in New York arguing that tether (USDT) was not a traditional commodity or a security.

Last year in April, New York Attorney General Letitia James claimed that Bitfinex and other associated companies were involved in hiding the loss of the conflated funds and then using affiliated stablecoin Tether money to cover the loss. The charges were subsequently pressed, and the case was lately heard by the Appellate Division of the NY State Supreme Court.

iFinex, a company owned by both Bitfinex and Tether, argued that the state did not have the right to pursue the claims because the company was not based in US, and NY jurisdiction would also not apply.    However, the reminds it had all jurisdiction against Bitfinex since many of its employees work in NY and also considering the fact that several residents of the country use USDT.

Apparently, Bitfinex claims to have deposited the funds with a Panamanian firm-Crypto Capital. The firm is believed to have provided shadow banking services to digital asset exchanges prior to being seized by different authorities. The firm said the lost funds were under the control of the Polish, American and Portuguese Governments. Bitfinex said it was working to get the funds back.

Bitfinex-Tether Lawsuit Timeline

The lawsuit dates back to two years after New York Attorney General Letitia James initiated an investigation into the suspicion that Tether had inadequate funds and liquidity to allow users to redeem USDT at market value. The investigation would have cut across iFinex and several other trading companies.

In 2019, Letitia signed a subpoena seeking information on Tether ‘s operations. iFinex accepted the subpoena and submitted several documents at the request of the court. However, the court found that the company had not produced all the information within the scope of the lawsuit.

This move alarmed that the exchange might not have enough backing to support the supply of its stablecoin.

“Today’s decision validates our office’s ability to use its broad and comprehensive investigative powers to protect New Yorkers,” James said in a statement. “Not even virtual currencies are above the law. We are pleased with the court’s decision, and will continue to protect the interest of investors in the marketplace.”