Bitfinex Tether Court Case Update: Lawyers Push For Dismissal, Say NYAG Lacks Personal Jurisdiction
Lawyers representing renowned crypto exchange, Bitfinex, and its subsidiary stablecoin company, Tether, have ordered a motion to dismiss the case brought against them by the New York Attorney General’s Office.
A dismissal order has been filed by Bitfinex and Tether’s legal team this week, on the basis that the New York Attorney General’s Office (NYAG) has insufficient grounds to continue with its injunction.
“In light of [the] facts…[The] Respondents respectfully request that the entire proceeding be dismissed for lack of personal and subject matter jurisdiction.”
Legal representatives acting on behalf of the adjoining crypto companies told the New York Supreme Court that the NYAG was “onerous” to start proceedings against the Respondents for the purposes of protecting New York investors since both parties “have nothing to do with New York investors”.
On the basis of the following points below, they have motioned that the Gen. Bus. L. § 354 order, which places an obligation on Bitfinex and Tether to produce documents pertaining to the transfer of some $850 million between the two companies, be stayed while the Court considers the dismissal order.
- (1) The NYAG lacks jurisdictional power over Bitfinex and Tether, as both companies are registered overseas. Furthermore, the Respondent’s lawyers assert that Bitfinex and Tether “do not allow New York investors on their platforms”, nor do they advertise or conduct any other sort of business within that jurisdiction.
- (2) The lawyers have also argued that there has been no violation of the 1921 Martin Act, as Tether (USDT) does not satisfy the definition of a ‘traded security’ under US laws - it is “purchased for its functionality”.
“Making matters worse, [the NYAG] has proceeded under a statute, the Martin Act, governing “securities” and “commodities,” neither of which describes the product bought by the supposed “victims” here, a “stablecoin” called tether.”
- (3) There is no wording in the relevant statute that states a Gen. Bus. L. § 354 order has “extraterritorial” powers beyond the state of New York. Therefore, Bitfinex and Tether’s lawyers state that the NYAG has no authority to demand the surrender of documentation from either party.
For now, we have to wait and see if the NY Supreme Court will grant the motioned dismissal, or allow the high profile case to continue. As it stands, Bitfinex and Tether’s credit line to each other still remains frozen while the NY Supreme Court deliberates on the case.