Op Ed: A Summary of NYAG vs. Bitfinex/Tether
History of the DisputeThe Court granted a preliminary injunction limiting Bitfinex/Tether from further violating the Martin Act including engaging in"fraudulent, deceptive, or illegal acts," and"employing any device, scheme, or artifice to defraud or obtain money or property by way of false pretense, representation, or guarantee."
- Any use of Tether's reserves by Bitfinex
- Earning any profits or distributions to some of the high tech partners of Bitfinex/Tether using funds which were already borrowed from Tether's reserves ( this doesn't include obligations in the normal course of business, such as payroll, payments to vendors, consultants, builders, etc.. )
- Directly or indirectly tampering with or destroying some evidence (such as a very long list of all documents/communications) or other data asked by the NYAG's November 27, 2018, or February 26, 2018, (this may be a typo, I believe that the court meant 2019) document requests.
Released at Fri, 17 May 2019 19:14:55 +0000 Bitfinex/Tether objected no warning was given by the OAG, even though being with them , and sentenced to the court to modify the purchase. A hearing was on May 6, 2019, and the court discovered that Bitfinex/Tether needed to produce some evidence but agreed the injunction also needs to be modified.
At the latest on the ongoing legal dispute between the New York Attorney General (NYAG), cryptocurrency trade Bitfinex along with stablecoin issuer Tether, the New York Supreme Court has modified an April 24, 2019, preliminary injunction and today Bitfinex is permitted to keep on employing the Tether reserves which were loaned to it to maintain its ordinary course of business, like paying employees and advisers. However, no further funds may be withdrawn by Bitfinex in the Tether reserve and have to comply with document requests. This modified injunction will last for 90 days, and went into effect on May 16, 2019. The court found that the NYAG left a satisfactory showing to meet the very high standards necessary to get a preliminary injunction which could stop Bitfinex/Tether from continuing to allow dollars flow from the reserves of Tether while the investigation persists. The courtroom revised the preliminary injunction to hit a balance between protecting Bitfinex/Tether from business restrictions and protecting people. Because it had no end point the temporary injunction was found to be overbroad, vague and not preliminary. It prevented Bitfinex/Tether from"further violations of law or committing fraud" Meanwhile, the Bitfinex appears to have raised $1 billion independently over 10 months, based on its CTO on Twitter. This injunction will last 90 days beginning from May 16, 2019. This caused the court ordered document creation and injunction, forbidding Bitfinex from obtaining the Tether bookings for any reason whatsoever. The concern is that, on February 21, 2019, the OAG learned that Bitfinex contemplated a trade that would allow Bitfinex to draw Tether's money reserves. Even the OAG had serious issues regarding the viability of Bitfinex and if any money it"borrowed" can ever be reimbursed to the Tether reserves. Bitfinex/Tether disregarded these concerns and paperwork that was established to get a $900 million line of credit with the reserves of Tether and advised the OAG two weeks after. $625 million had been in November 2018, so this paperwork appeared to be an attempt to find the ducks in a row as it turned out. Tether was left by the loan using $150 million and the NYAG suspected this may be dissipated at any moment. Claimed it turned out to be a proper, arms-length trade. The courtroom reworded the injunction so as not to control Bitfinex/Tether from normal business activities. Now Bitfinex/Tether and their representatives are prohibited from