Bitfinex Wins Right to Modify NYAG Injunction; Calls NYAG Claims Meritless
The exchange was granted a deadline for the investigation while being able to continue business as usual.
The Bitfinex exchange was granted a motion to modify the injunction of the New York Attorney General, after the market operator argued the investigation and injunction were in bad faith and failed to take into account the specifics of the business.
Judge Joel M. Cohen of the New York Supreme Court concluded that investigating Bitfinex under the New York Martin Act for fraud “does not provide a roving mandate to regulate commercial activity.” Thus, the injunction will expire in the next 90 days, and the NYAG will only have this time to make its case against Bitfinex.
“We are grateful that Judge Cohen recognized, in argument before his court, that the original injunction obtained by the New York Attorney General was “both amorphous and endless,” and that It needed to be “as narrow as possible.” We believe that the court’s decision today leaves no doubt that both Tether and Bitfinex are entitled to run their businesses in the ordinary course, even during the short period when this now narrowed preliminary injunction is in place,” Bitfinex explained in a statement.
The business of Bitfinex and Tether has been under various forms of investigation for years, but the exchange and the issuer of the USDT stablecoin continued to operate despite setbacks. This has caused concern with the crypto community, as USDT trading has reached record levels, while Bitfinex still faces problems after it became clear some of its funds in fiat were locked due to investigations against the subsidiaries of Crypto Capital.
Bitfinex and Tether have had banking trouble in the past, after losing the services of Wells Fargo and later failing to secure a new banking partner. Bitfinex continued to manage some of the fiat withdrawals and deposits, by the ad hoc banking services of Crypto Capital. Bitfinex, however, still states that the claims of the NYAG are “meritless”.
Despite the criticisms, USDT continued to trade at record volumes and turnovers. This led to Bitcoin (BTC) breaking above the $8,000 level for the first time in the past 12 months. The rally, however, was short-lived, and Bitfinex and Tether will still have to prove their capability to support trust and operate with only 74% backing of each USDT coin.
Recently, Bitfinex claimed to have raised $1 billion through the sale of the LEO token in an initial exchange offering, to compensate for the funds locked with Crypto Capital.