NYAG’s legislation paper was submitted on May 3. New York Attorney General’s (NYAG) first prosecuted Bitfinex and Tether for all papers related to an estimated loss of $850 million by the cryptoexchange on April 25, while making public that Tether had given a $625 million grant and another $900 million credit line to assist Bitfinex sustain activities as an alternative to the absence of urgent financing.
The petition is the recent step in a continuing legal fight between NYAG and iFinex— the holding company that owns both Bitfinex and Tether — that begun previously this April. The NYAG criticized Bitfinex of not being transparent to Tether’s clients about the the former’s plan to obtain approximately $1 billion from the company’s credit resources.
iFinex asserted the conditions were established at “arm length” in an agreement concerning autonomous representation for both sides. In its initial restraining order, the NYAG said they didn’t want to deter Bitfinex or Tether from their ongoing activities, but moved to avoid Tether from providing any additional cash to Bitfinex, a decision Bitfinex challenged.
In last weekend filing, NYAG officials stated that “the order does nothing to limit Respondents’ ability to operate their business in the normal course, as they have continued to do since the injunction.”
They also claim that Bitfinex and Tether’s attorneys “confess” that the “narrow” restraining order is legal under government legislation, and their proposal to revoke the order calls on the tribunal to “merely create fresh legislation.” Otherwise, the document explained how the scenario was caused by problems at Crypto Capital, a third-party banking and payment facilities company with whom Bitfinex held the $850million.
Bitfinex holds that since then, law enforcement authorities have seized money as part of continuing efforts against the business. Notably, the NYAG used supposed contradictions in Bitfinex’s testimony about its connection with Crypto Capital as argument for demanding more transparency on credit information. The memorandum of law calls for even more clarity and argues “that Bitfinex and Tether misled their customers and shareholders.” The declaration also describes why the Attorney General’s Office sees the need to submit said records:
“While that and other discrepancies do not change the core issues in this case […] they only heighten the OAG’s [Office of the Attorney General’s] need to obtain documents and information in a timely, organized fashion so that the OAG may understand what has taken place, and what continues to take place, at these companies.”
The document also points out that the authorities have “craft[ed] a narrow injunction to preserve the status quo and prevent Respondents from further dissipating the cash reserves that supposedly back the tether virtual currency, pending completion of the OAG’s investigation.”
The NYAG also claims the ongoing problem did not prevent Bitfinex and Tether from having to “run their business in the ordinary course, as they have tried to do since the restraining order.”
Back in April, the NYAG claimed that Bitfinex wasted $850 million and consequently used affiliate Tether’s money to cover up the losses. Soon thereafter, Tether and Bitfinex replied to the charges with a declaration stating affidavits by the New York Attorney General’s department were “riddled with fake claims.”
Lately, a Bitfinex subsidiary published records confirming that the exchange is preparing a roughly $1 billion initial coin offer of LEO, its native crypto Last week, a two-person indicted on various charges exposed an obvious link to shadow finance facilities used by crypto exchanges Bitfinex and QuadrigaCX.