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Bitfinex Claims Victory as Supreme Court Gives Nod to Exchange & Tether

P. H. Madore
The NY Supreme Court has placed limits on the AG's investigation into the controversial pair. | Source: (i) Shutterstock (ii) Shutterstock; Edited by CCN

By CCN: The New York Supreme Court has ruled that the scope of the Attorney General’s investigation into Bitfinex and Tether Limited is too broad and needs a time limit.

Bitfinex: Supreme Court Ruling a “Victory”

The embattled exchange called the ruling a “victory” and insinuates that the case will end up going nowhere. Bitfinex has already admitted that as much as $850 million evaporated from its coffers while Tether Limited has publicly confessed to only partially backing the world’s oldest stablecoin.

Under the order, Tether and Bitfinex can continue business as usual, but Tether Limited may not make any loans to Bitfinex. Moreover, while the injunction has been modified, Bitfinex and Tether are called on to cooperate with the investigation to the best of their ability.

“Having now heard both sides of the story, the Court grants Respondents’ motion in part and denies it in part for the reasons set forth on the record at a hearing on May 6, 2019 and as summarized herein. In a nutshell, the Court finds that Petitioner is entitled to the Order requiring Respondent to promptly produce evidence, but that the preliminary injunction contained in the Order should be modified.”

Tether-Bitfinex Credit Line Frozen

Judge Joel M. Cohen notes that a vital part of the attorney general’s investigation rests on the idea that Bitfinex secured a line of credit from Tether. Tether will not be allowed to loan any money to Bitfinex while the investigation is ongoing, and both companies need to provide information about that situation. While stipulating that New York law doesn’t give the AG with carte blanche, the court does uphold the AG’s right to investigate under New York business law.

“[T]he Court finds that Petitioner has made a sufficient showing to warrant a targeted preliminary injunction preventing Respondents from continuing to let dollars flow out of Tether’s reserves via the type of extraordinary transaction that triggered Petitioner’s concern.”

Read the full story on CCN.com.