Bitfinex and stablecoin operator Tether have been locked in an extended legal battle with the Office of New York’s Attorney General (ONYAG) for the better part of four months. Today’s ruling by the Judge is a blow to those who can’t wait for the case to end.
Yesterday, Justice Joel M. Cohen of the New York Supreme Court ruled to extend the preliminary injunction in their case. According to a Twitter post from Celia Wan, a journalist at news medium The Block, Judge Cohen decided to allow a 90-day extension to the case, which means that the ONYAG is free to continue with its investigation into its original case.
Cohen just decided to give a 90 day extension to the case, meaning that AG can still investigate. Tether lawyers tried to appeal to dismiss the motion immediately but Cohen denied. https://t.co/PI8hQeXZgO
— Celia Wan (@celiawan2) July 29, 2019
Cohen reportedly said that he needed more time to make a decision as regards whether to dismiss the case or rule in favor of the two crypto companies. He pointed out that dismissing the case will apply to his injunction as well, while a refusal to dismiss the case will extend the injunction. So, he is electing to “Keep things where they are until the decision of this motion” is reached
While attorneys for cryptocurrency exchange Bitfinex and Tether made attempts to appeal the case and push forward their motion to dismiss the case indefinitely, Cohen reportedly rejected their appeal.
It’s also noteworthy that while the ruling means that the legal authority is free to continue pursuing this case, it also means that Tether and Bitfinex can continue with day-to-day operations and serve people who want to buy cryptocurrency. The only catch is that Tether is still prohibited from lending any funds to its sister company.
The case began in April when ONYAG Letitia James revealed that her office had gotten wind of New York law violations on the part of iFinex and its associated entities, claiming they defrauded investors based in New York.
Bitfinex was accused of having lost $850 million in corporate and client funds and using about $900 million in Tether cash reserves to cover its misfortune. iFinex responded that the case was false, and that the lost funds were being safeguarded.
Then, iFinex applied to dismiss the case, arguing that the ONYAG doesn’t have a legal basis to investigate it since Bitfinex wasn’t even operating in New York at the time. However, the legal authority highlighted that New York-based Metropolitan Bank, had closed down an account with Tether. This, according to them, was substantial proof that both companies had been operating within the state.
Bitfinex and Tether have responded with multiple filings alleging that they never served customers within New York. The companies’ attorneys have also argued that even if the ONYAG was able to show that they had dealings in the state, they still couldn’t explain how the companies’ actions have harmed investors.
So, it is a tad understandable that Judge Cohen needs some time to parse the case and make an appropriate ruling. Both parties have made compelling arguments, and given how much is in dispute here, as well as the precedent that this case might set going forward, another 90 days for consideration seems just about right.