Bitfinex and Tether must continue turning documents about an alleged $850 million cover up over to the New York Attorney General (NYAG), a judge ruled Monday.
New York Supreme Court Judge Joel M. Cohen ruled that the crypto exchange and stablecoin issuer would have to have to continue turning over documents about a loan the latter company made to Bitfinex, though the companies are expected to appeal the ruling.
Cohen said the injunction would expire on Oct. 14, adding:
“The Court disagrees with the Petitioner that it is (or can be) premature for the Court to determine whether it has jurisdiction to issue orders impacting the rights of Respondents in this proceeding. That said, the Court finds based on the evidence and applicable law that it has jurisdiction – and a clear statutory mandate – to adjudicate this matter. Accordingly, Respondents’ motion is denied, and the temporary stay of the investigation is dissolved.”
The decision gives Bitfinex and Tether another 90 days to turn over documents amid the ongoing investigation by the New York Attorney General’s office (NYAG), which filed for an injunction in April after alleging that Bitfinex was trying to cover up the loss of $850 million held by a payment processor called Crypto Capital.
At the time, the NYAG’s office claimed that Bitfinex and Tether had negotiated a line of credit, enabling Bitfinex to borrow as much as $700 million from Tether’s reserves. The line of credit would have allowed the exchange to borrow another $200 million, but an injunction imposed by Cohen in May froze any further lending.
However, Bitfinex and Tether were still required to hand over a number of documents pertaining to the companies’ relationship and the deal. Attorneys for the companies filed a motion to dismiss the NYAG’s case entirely, claiming that the government did not have any jurisdictional authority over the companies, which claimed to not operate in New York or serve any New York-based customers.
While oral arguments were heard in court on July 29, Cohen said he needed a bit more time to deliberate before making a final ruling.
In a letter submitted a day after the hearing, Bitfinex and Tether attorneys said the companies had already spent $500,000 just finding documents to comply with the existing injunction, putting 60 different lawyers to work to pull files from 10 different communications systems. The attorneys also said that they would appeal any ruling in favor of the NYAG’s office.
New York Supreme Court image via CoinDesk
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