The USDT has contributed to the popularity and development of stable currencies, but negative news has continued.
On April 25, 2019, the New York State Attorney General's Office (NYAG) brought the USDT issuer Tether and its parent company iFinex Inc and Bitfinex to court. The two charges were alleged to be suspected of multiple major violations, and further speculation that Tether was suspected of misappropriating $900 million in USDT reserves to help Bitfinex make up for the deficit.
NYAG also believes that Bitfinex and Tether are using their market position to perpetuate fraud. If the results of the investigation are true, Bitfinex and Tether may not only face a high fine of $42 million, but may even be sentenced to stop operating.
- Those things in Tether (USDT)
- Tether said the USDT stable currency has been fully supported by its reserves
- USDT Final Judgment: "Doomsday" is coming? What do you think about the short-term and long-term?
- 4 billion knives stable currency rivers and lakes: fallen and climbed
- Bitfinex denies “manipulating the market” or will file a lawsuit against the allegations
- Accused Tether and Bitfinex of the New York State Attorney General doing something big?
At 9:30 am on July 29th (9:30 pm on July 29th, Beijing time), the hearing of the most eye-catching judicial case in this year’s currency circle was held. The “doomsday trial” of the frontal confrontation finally came. .
At 9:30 am New York time on July 29, the New York State Attorney General's Office (NYAG) and USDT's issuer Tether attended the hearing. The focus of the hearing was on whether Bitfinex and Tether were serving customers in New York State.
By the end of the hearing, New York Supreme Court Justice Joel M. Cohen had not ruled in court and said that he needed more time to think.
According to blockchain media The Block, Joel M. Cohen has approved the extension of the case for 90 days. NYAG can still investigate the case, and Bitfinex's lawyer tried to appeal the refusal, but was eventually rejected by the judge.
The delay is 90 days, which means that the next court day is about October 27.
Although the hearing did not make a final decision on Bitfinex and Tether, the two sides discussed whether USDT is a security and whether Bitfinex provides trading services for New York State residents:
Bitfinex claims that because Tether is not a security or commodity, the court has no subject matter jurisdiction and does not comply with the US Fine Arts Act (Martin Act). Odaily Planet Daily Note: The Martin Act, the New York State Blue Sky Act, aims to prevent fraud and protect the interests of investors. The Martin Act is known as one of the toughest anti-fraud laws because it does not require the prosecutor to prove that the defendant "intentionally" or express the defendant's criminal "motivation", but only requires proof of wrong or misleading investment advice. There is a causal relationship with the losses suffered by investors. In the United States, engaging in securities financial activities must not only meet the requirements set by the Securities and Exchange Commission, but also comply with a series of laws and regulations formulated by the other governments of the states.
For Bitfinex, “Tether because Tether is not a security or commodity, the court has no subject matter jurisdiction,” NYAG said: “Any dispute in this case has nothing to do with Bitfinex’s act of prohibiting services to New York customers, so there is no jurisdiction. Scope. The scope of the Bitfinex investigation is very different from the scope of this hearing."
Later, NYAG tried to raise questions at the level of personal jurisdiction, Tether executives lived and worked in New York, and registered accounts in New York State. They established a business relationship in New York, using the USDT to exchange BTCs and other virtual assets.
Bitfinex and Tether once again stated that they are not serving New York customers, and their defense attorneys said: "Tether's Terms of Service exclude US customers and make it clear that New York customers are unpopular. No ban is perfect. But Tether does work very hard. Keeping New York customers away from Tether's services. Last week, Tether confirmed that a customer was a New York resident and shut him out."
In response to Bitfinex and Tether's restatement, NYAG said it does not care whether New York users use USDT. They are concerned that Bitfinex and Tether executives conduct virtual currency transactions in New York. According to NYAG, Tether executives are indeed living, doing business in New York and working hard to open accounts to trade with Tether and Bitcoin and other virtual currencies.
Review the whole process of NYAG and Bitfinex, Tether litigation
NYAG’s complaints against Bitfinex and Tether focused on three points: the misappropriation of the USDT reserve, the illegal opening of the New York State residents and the USDT’s 1:1 anchoring relationship with the US dollar.
On April 25, 2019, at 16:15 (UTC), the New York prosecutor first brought Tether, Bitfinex and its parent company, iFinex Inc., to court for alleged fraud involving fraudulent interests of investors, in violation of the harshness of New York State. Securities Act Martin Act.
The 23-page prosecution allegation file shows that since 2018, Bitfinex has incurred a huge loss of $850 million in the fund custody process. After the incident, the company did not disclose to investors, trying to conceal the loss, and reached out to Tether to pay the USDT reserve, secretly misappropriated at least $700 million to make up for the financial deficit. The Office of the Attorney General of New York also received a preliminary ban on the freezing of Tether assets and asked the two companies to provide documents worth approximately $625 million and $900 million in line of credit.
On that day, Bitfinex sent a counterattack, insisting that “Bitfinex and Tether are in good financial condition”, which is not “loss” and is an “accident” when working with third-party payment company Crypto Capital Corp. The huge amount of encrypted capital was not lost, but was seized and protected. Bitfinex pointed out that the Office of the Attorney General of New York was seriously overstepped and malicious, and the allegations were full of false conclusions and insisted on fighting the Office of the Inspector General of New York.
On May 21, NYAG dismissed the protests of Bitfinex and Tether and conditionally approved the New York Attorney General's transfer of business information. According to Harry Zhou, chief compliance officer of Koi Trading, the US OTC trading platform, based on evidence, NYAG has determined that more than 50% of Bitfinex and Tether are likely to engage in “securities fraud”. At a macro level, US federal and state regulation seems to have reached a consensus to effectively fight all Tether-dependent offshore exchanges at one time by cracking down on Tether.
On July 8, the Office of the Attorney General of New York submitted a report describing that Bitfinex and Tether were suspected of issuing illegally traded securities in New York State, and continued to operate some of the business in New York in January 2019, and were non-registered securities operators. It was submitted to NYAG as evidence to prove that it has the right to investigate these companies.
The Office of the Attorney General of New York requested Bitfinex, Tether and its affiliates to submit a response to the latest motion by July 22, and the hearing is scheduled to take place on July 29.
On July 23, Bitfinex and Tether submitted new legal documents in response to NYAG's earlier allegations that "Bitfinex and Tether have been serving customers in the New York area". Bitfinex and Tether claim that NYAG accused them of being New York residents in 2018. The arguments for service are misleading,
According to a new document by Bitfinex and Tether General Counsel Stuart Hoegner, a document submitted by the Office of the Attorney General of New York stated that Imperial State residents used the platforms of these companies for much longer than previously said.
“Contains many inaccuracies and misleading assertions.”
According to Hoegner, some of the documents provided by NYAG seem to outline that Bitfinex and Tether allow New Yorkers to trade on Bitfinex by doing business with foreign entities that do not have entities in New York, but in fact, other documents describe those of Bitfinex. Customers based in New York are actually “foreign ECPs (Qualified Contract Participants)”. Hoegner gave an example, like Galaxy Digital, a former Fortress partner, Mike Novogratz, which has an office address in New York City.
Hoegner said that Bitfinex stopped serving New York residents in January 2017 and stopped serving all US residents in August of the same year. He added that all entities and corporate customers in the United States were banned after one year.
“According to the terms of service of Bitfinex and Tether, “ECPs” dealing with Bitfinex or Tether must be foreign entities. Although these foreign entities may have shareholders or personnel living in the United States or New York, or otherwise contacted, Bitfinex and Tether's customers are themselves foreign entities… Bitfinex and Tether do not trade with any New York ECPs," Hoegner said.
The impact of the hearing on the USDT is minimal
According to the current market voice, the impact of the NYAG hearing on Tether and USDT seems to be minimal.
Let us first look at the current market share and market value of Tether and USDT.
According to DAppTotal's "DeFi Industry Research Report for the First Half of 2019", the total circulation of the stable currency market was US$4.57 billion as of June 30, 2019, of which USDT was US$3.68 billion, accounting for 80.6% of the market. Among them, the USDT based on the OMNI network accounted for 71.8%, the USDT based on the ERC20 Ethereum network accounted for 27.1%, and the USDT based on the TRC20 wave field network accounted for 1%.
Since April this year, the ETF's USDT circulation and the frequency of additional issuance have increased sharply. Judging from the daily trading volume of the stable currency chain, the single-day transaction amount on June 30 is 859 million US dollars, which means that the overall circulation of the stable currency will change every 5 or 6 days.
In addition, according to TrustnodesTether, USDT's market capitalization exceeded $4 billion, the highest level since its launch in 2015. In just a few weeks, the dollar-stabilized stable currency soared from $2.8 billion on May 16 to $4 billion, mainly due to the recent large-scale issuance based on the Ethereum ERC-20 token.
At present, the market value of USDT is about 4 billion US dollars, and the daily turnover has reached an astonishing 11 billion US dollars. The current total market value of the entire crypto asset is $310 billion, and the daily turnover is maintained at around $28 billion. The proportion is 1.3% and 40% respectively.
We can watch the Olympics. Since the Tether accident in April this year, the USDT has been in a state of additional issuance. The market share and market value have also been rising. It can be seen that in the short term, Bitfinex “misappropriates” the Tether reserve, the impact on Tether can be almost omitted. Excluding.
In addition, we also collected the views of third parties on this USDT hearing:
The netizen named "Pepe" said: "The hearing of the 'circle of the currency' does not seem to be the first experience. The hearing is that everyone sat together and said the ideas and testimonies of all parties. As for the final trial, what is the result, you may not be able to decide on the same day, and wait, if you don’t know what to do with the supervision, you will have a result, so be careful not to give the harvest because of the ambiguous news. ""
The blockchain from the media block nuggets "smoke rain" thinks:
"Although in theory, the market for USDT stabilized coins is mainly in Asia, the use of Americans is negligible, and the impact of the hearing should be minimal. But the current digital currency market is still immature, and it’s all over the place, especially It is the news of the supervision of the United States, which will always become the focus of the market, so its influence is difficult to estimate."
"I remember that on October 15 last year, the USDT was used by the dealers because of the collapse of the rumors, resulting in a sharp change in the short-term market. At that time, the mainstream currency rose collectively, the bitcoin amplitude was as high as 20%, the USDT plummeted all the way, and the retail investors sold the USDT in their hands. Buying bitcoin and other mainstream currencies. The result is obvious, the dealer successfully used the USDT trust crisis, sold the mainstream currency at a high price, then took the USDT back at a low price, then sold it to retail investors, and at the same time, long and short in the futures market. Explosive, and took a huge profit."
The blockchain analysis from the media "coin lord" said, "the court will make the judgment on the same day as soon as possible. According to the laws of New York State, once Tether and Bitfinex lose the case, they will have to pay the fine and close the business in New York, and win the case. It will not be directly ruled. The focus is on just shutting down New York's business. Tether and Bitfinex are not registered in New York. In other words, Tether can no longer provide USDT exchange services to New York (maximum US residents). As for other regions, New York law also controls No."
For the hearing just ended, Ddong founder and Bitfinex shareholder Zhao Dong released Weibo saying: Bitfinex and Tether are temporarily fine. However, NYAG will definitely continue to stare at them. The United States wants to kill Bitfinex and Tether. It is not a right or wrong issue, but a political issue, just as the United States wants to kill Huawei.
"Everyone has prepared: Bitfinex, Tether and NYAG confrontation"
Original article, the authors: the king; legal violations reproduced reserved.
Source: Planet Daily