On July 8, 2019, the New York Attorney General’s Office (NYAG) submitted new court filings alleging that iFinex Inc., the parent company of cryptocurrency exchange Bitfinex and stablecoin issuing firm Tether (USDT), continued providing services to New York residents as late as January 2019. First reports on the subject came from The Block on July 8, 2019.
A New Can of Worms
As part of its ongoing investigation into Bitfinex and Tether, the NYAG Office has submitted fresh court evidence to prove that the two entities served its New York clients longer than they had claimed.
Per sources close to the matter, New York City’s legal watchdog has filed a Memorandum of Law in Opposition, an affirmation, and a total of 28 exhibit documents with the New York Supreme Court which cast light on iFinex’s business operations in the city.
The NYAG’s court filings read in part:
“Even a cursory examination of the facts gathered to date in the OAG’ s investigation shows that Respondents have extensive and consistent contacts to New York concerning the matters under investigation.”
Notably, in 2015, Bitfinex declared that it had suspended its services for New York City-based digital assets traders. Running a cryptocurrency business in New York City is nothing short of a herculean task as it requires the venture to secure the highly-covered BitLicense from the New York Financial Department of Financial Services (NYFDS).
However, the documents submitted by the NYAG Office paint a slightly different picture.
Included in the fresh evidence against Bitfinex is an exhaustive list of IP addresses which Bitfinex’s customers allegedly used to access the exchange’s services. The legal authority claims that Bitfinex representatives continually exchanged trading and funds related information with New York-based traders as late as January 2019.
Reportedly, the NYAG Office has also offered to share court sensitive documents about its investigation privately so as not to influence the ongoing investigation efforts being carried out by concerned authorities.
A Long War Unfolding
The legal battle between the NYAG Office, Bitfinex and Tether began in April 2019 when the former accused the two companies of colluding to cover an $850 million business loss with client funds. Being at the receiving end of such a serious accusation, “stablecoin” USDT’s price quickly plunged to about $0.97.
In response, iFinex claimed that the NYAG Office had no regulatory authority over its operations as the firm was based out of the British Virgin Islands.
More recently, the Hong Kong-based digital assets firm claimed a “legal victory” of sorts over the NYAG after the New York Supreme Court Judge, Joel M. Cohen, allowed a stay of documents in favor of Bitfinex, thus, stunting the regulatory body’s authority to extract key official documents from the exchange.