Should cryptocurrency exchange Bitfinex submit relevant documents to the Office of the Attorney General of New York (NYAG)? The New York Supreme Court chose to postpone the decision for 90 days.
Bitfinex and Tether's fate are pending
But despite the delay, Bitfinex failed to persuade the court to dismiss the case on Monday, which did not bode well for the cryptocurrency exchange, as it actually extended the ban. “I don't blame the judge,” said Olta Andoni, head of blockchain business at Ziliak Law and an adjunct professor at the University of Kent Law School in Chicago.
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The documents NYICA submitted to the court last week caused strong opposition from Bitfinex. The document states that NYAG recommends using the Martin Act and the exchange's relationship with New York to resolve Bitfinex's jurisdiction under Hong Kong. The Martin Act allows US government agencies to track foreign entities.
Although the court's ruling means that it needs more time to decide whether NYAG does have jurisdiction, it also means that the ban on Bitfinex's business will continue to be in force and NYAG has the right to continue investigations.
NYAG is trying to obtain documents that prove that Bitfinex is suspected of covering up its behavior of confusing approximately $800 million in customer and corporate funds. Earlier this year, the agency claimed that the exchange had used Tether's foreign exchange reserves without informing investors, masking the deficit to some extent. Tether is a sister company of Bitfinex and the publisher of the USDT linked to the US dollar.
In a document last week, Bitfinex's lawyer argued to the court that NYAG had neither personal jurisdiction nor subject matter jurisdiction in this case. In fact, jurisdiction – and the ability of NYAG to force a Hong Kong company to comply with US law – is at the heart of the case.
Andoni added that she personally thinks that Bitfinex's statement is "ridiculous." Bitfinex said the company is actively working to keep its New York-based customers away from its platform. After all, according to the latest report, in order for potential New York customers to open accounts on the exchange, they only need to click the mouse and then lie about their living conditions.
Andoni said that NYAG's arguments about personal jurisdiction are very convincing. He believes that "Tether executives live in New York, do business in New York, and open accounts in New York to trade with Tether and Bitcoin or other virtual currencies."
However, Andoni explained that the New York State Court and the Federal Court have “controversial controversy” regarding the general jurisdiction of foreign entities. She said that in this case, “taking into account the activities of foreign entities in the country, the judge may try to establish jurisdiction over it. I think it may be successful.”
The Bitfinex defender claimed at the hearing that the USDT is not a security or a commodity.
Tether currency continues
Bitcoin development company Blockstream has launched a new version of its stable currency, Tether (USDT), on its Liquid network, a sidechain protocol designed to connect to exchanges.
Blockstream Chief Strategy Officer Samson Mow said Liquid Tether will be better, faster and safer.
Starting today, Bitfinex will provide a Liquid USDT replenishment service.
Liquid, launched last October, is designed to support higher transaction loads, allowing users to trade with a bitcoin-linked cryptocurrency “Liquid Bitcoin” (L-BTC). Users can now trade with Liquid Tether in this currency.
This is not the first time Tether has issued coins on other blockchains. Currently Tether has issued USDTs on the Bitcoin-based Omni layer, EOS, Tron and Algorand.
It seems that Bitfinex and Tether are not affected too much by the hearing.