Judge Rules Against Bitfinex’s Motion to Dismiss ONYAG Case

Some of the Stolen Bitcoins Make Their Way Back to Bitfinex 2

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Popular digital asset platform Bitfinex and stablecoin operator Tether have been locked in what is arguably the most compelling legal case in the crypto industry for 2019 against the Office of New ’York’s Attorney General (ONYAG). Now, the latter has just scored a significant victory in Court.

Earlier this week, the New York State Supreme Court published a court filing in which it ruled that the ONYAG does have jurisdiction to prosecute Bitfinex. Essentially, this means that the ONYAG is free to continue investigating the cryptocurrency exchange and its sister company (Tether, that is) over allegations of misleading investors and misappropriating funds.

In the filing, Judge Joel Cohen primarily dismissed a motion brought by Bitfinex which aimed to terminate the case against it by the ONYAG that would prosecute the former under the provisions of the Martin Act, a popular investment and stock trading law that applies primarily to the state of New York.

The entire case is one that every knowledgeable member of the crypto community already knows about; the ONYAG accused Bitfinex and Tether of covering up losses totaling up to $850 million back in April and misleading investors to believe that all was well with their asset holdings.

Since the original allegation was made public, scores of legal filings have gone back and forth between Bitfinex and state prosecutors, with the exchange claiming to have spent upwards of $500,000 and hired over 60 attorneys to comply with some of the ’ONYAG’s requirements.

However, the battle reached a significant point when Bitfinex filed its motion to dismiss the case. At the time, Bitfinex argued that the ONYAG doesn’t have any jurisdiction to investigate or prosecute it under the Martin Act.

The ’exchange’s argument was based on two grounds; the first was that neither it nor Tether was operating in New York at the time (as New York State has some rather stringent requirements for crypto companies to operate), while the second was that the ONYAG still didn’t have concrete evidence to prove that its actions had harmed investors in any way.

However, it would seem that the ’exchange’s argument didn’t quite stick the landing. In his filings, Judge Cohen denied Bitfinex and ’Tether’s motion to dismiss, satin that it was extra-jurisdictional, in addition to dissolving a temporary stay on the investigation by state prosecutors.

The judge, therefore, ruled that both Bitfinex and Tether would have to continue turning over relevant documents to the ONYAG, 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 also provides both companies with a further 90-day period to turn over all documents in the ongoing investigation.

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About Jimmy Aki

Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.