NYSC Judge Rules to Extend Bitfinex and iFinex Case

Justice Joel M. Cohen of the New York Supreme Court (NYSC) has ruled to extend the preliminary injunction in the ongoing case of crypto exchange Bitfinex and Tether’s parent company, iFinex, against the New York Attorney General (NYAG), on July 29.

Cohen reportedly decided to give a 90-day extension to the case, which apparently means that NYAG can continue investigating. Lawyers of Tether tried to appeal to dismiss the motion immediately, but Cohen rejected their appeal.

Speaking before the court, iFinex also argued that the court does not have subject matter jurisdiction because Tether is neither a security or commodity as there is no futures market. The companies’ defense also stressed that Tether and Bitfinex are two different companies with two different business models, and that it is not proper to treat them as a single entity as the NYAG does.

On April 25, 2019, the New York prosecutor brought Tether, Bitfinex and its parent company, iFinex Inc., to court for alleged fraud involving fraudulent interests of investors, in violation of the Martin Act.

The 23-page prosecution allegation file shows that since 2018, Bitfinex has incurred a huge loss of $850 million in the fund custody process. After the incident, the company did not disclose to investors and attempted to conceal the loss, and reached out to Tether to pay the USDT reserve, secretly misappropriated at least $700 million to make up for the financial deficit. The Office of the Attorney General of New York also received a preliminary ban on the freezing of Tether assets and asked the two companies to provide documents worth approximately $625 million and $900 million in line of credit.