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Op Ed: Summary of NYAG vs. Bitfinex / Tether



In the latest controversy between the NYAG, CryptoLife Bitfinex and the Sterling Tether Issuer, the New York Supreme Court changed the Preliminary Act of April 24, 2019, and Bitfinex is now allowed to continue using the Retained Reserves provided to maintain their usual business, such as paying employees and consultants. However, Bitfinex can not withdraw additional funds from the Tether Reserve and must comply with all document requests under the NYAG investigation. This modified preliminary ban entered into force on 16 May 2019 and will continue for 90 days.

History of the dispute

On April 24, 2019, the Supreme Court of the State of New York State Department of Commerce issued an order from the Chief Prosecutor's Office requesting Bitfinex / Tether to provide information under the Martin Law. The court approved an early injunction restricting Bitfinex / Tether from further violating the law of the United States, including fraudulent, misleading or unlawful acts and use of a device, scheme or fraud for fraud or the receipt of money or property through counterfeiting. presentation or promise. "

Bitfinex / Tether argued that KAG had not warned, even though it was in close contact with them, and turned to the court to change the order. There was a hearing on 6 May 2019 and the court found that Bitfinex / Tether needed to provide further evidence, but agreed that the preliminary ban should also be changed.

The primary concern raised by the court is that on February 21, 2019, the CGA has learned that Bitfinex is planning a transaction that would allow Bitfinex to use Tether's available reserves. The CAG had serious concerns about the viability of Bitfinex and whether any money that "borrowed" could be recovered from Tether's reserves. Bitfinex / Tether ignored these concerns and identified $ 900 million credit line documents with Tether's reserves and informed OAG two days later on March 29, 2019. It turned out that $ 625 million was already in employment in November 2018 This crediting paper seems to be an attempt to order ducks after the fact. The loan left Tether with $ 150 million in reserve, and NIAG suspected that it could be dispelled at any time. Bitfinex / Tether firmly maintained that this was a proper hand length transaction.

As a result, on April 24, 2019, the court ordered the proceedings and the order to issue documents, forbidding Bitfields from gaining access to Tether's reserves for any reason.

It seems that the court has received many of the documents he has requested from Bitfinex / Tether, which is the main purpose of the order. Thus, on May 16, 2019, the court changed the order. The Court notes that its injunctions under the New York Business Act and the Martin Law are limited beyond the scope of compulsive production of documents:[the applicable law] does not provide for a mandate to regulate commercial activity by object or purpose of an investigation into Martin Act. "

The court found that NYAG had shown enough to meet the very high standards required for a pre-order that would prevent Bitfinex / Tether from continuing to leave the dollars out of Tether's reserves until the investigation is ongoing. The court reviewed the preliminary provision in order to find a balance between protecting the public and protecting Bitfinex / Tether from unjustified business restrictions. The initial temporary ban is vague, excessive, and not preliminary, as there is no ending point. He prevented Bitfinex / Tether from "further violations of the law or committing fraud".

Order May 16

The court rephrased the preliminary order so as not to limit Bitfinex / Tether from its usual business activities. It is now forbidden to use Bitfinex / Tether and their agents

  • Any use of Bitfinex Tether Reserves
  • Making any distributions or dividends to any of Bitfinex / Tether's top contributors using funds already attracted by Tether's reserves (this does not include payments in the usual business such as pay, payments to suppliers, consultants, performers, etc.)
  • Direct or indirect tampering or destruction of any evidence (including a long list of documents / messages) or other information requested by NYAG on 27, 2018 or 26 February 2018 (this may be a typo, I think the court means 2019) requests for documents.

This preliminary ban will continue for 90 days from 16 May 2019.

At the same time, Bitfinex seems to have attracted $ 1 billion. Private within 10 days, according to CTO, Paolo Ardoino, on Twitter.

This is Operation Sasha Hodder. The views expressed are hers and do not necessarily reflect those of Bitcoin or BTC Inc.


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