Bitfinex said NYAG's investigation was too demanding, and the latter insisted that it submit relevant documents.

Don't complain, Bitfinex.

This is the message from the New York Attorney General's Office (NYAG) recently filed in court documents for the cryptocurrency exchange Bitfinex and its affiliated stable currency issuer Tether.


Image source: pixabay

Earlier this week, Bitfinex and Tether lawyers complained to the New York State Supreme Court judge Joel M. Cohen that the two companies are currently spending $500,000. 60 lawyers were hired to collect the documents required by the NYAG office. They wrote that some of the costs were generated by the survey using 10 different communication systems.

But in a letter to the judge on Thursday, NYAG's lawyers scorned Bitfinex and Tether's claim that NYAG's requirements were too harsh. Lawyers John Castiglione, Johanna Skrzypczyk and Brian Whitehurst wrote in the letter:

“When collecting and reviewing the communication materials required in Directive No. 354, the court should note that the 354 command also requires the respondent to provide any responsible trading platform or exchange, regardless of the difficulties encountered by the respondent. Master the information."

Information gathered at the NYAG office includes the issuance and redemption of Tether Stabilized Coins, its current company, trading and customer accounts, tax returns, and information about any customers who want to withdraw cash from Bitfinex. The letter also wrote:

"Order No. 354 also requires the submission of so-called documents relating to the 'credit quota' transaction, all of which are apparently generated when OAG summons the respondents and should therefore be reasonably preserved. It is not difficult to produce such information. Not expensive."

Case progress

Given that the difficulty of producing the document is expected to be reduced, Thursday's document requires Judge Cohen to reject the request for suspension of the lawsuit filed by Bitfinex and Tether. NYAG's attorneys argued that even if the order filed under section 354 of the Martin Act was permanently placed on hold by the court, the two companies must hand over the documents.

NYAG is investigating a previous concern that Bitfinex has concealed a $850 million loss from a payment processing company by borrowing from Tether's stable currency reserve. Tehter provided Bitfinex with a $900 million loan, and Bitfinex borrowed $700 million before the ban freeze.

New York investigators are looking for more information about the deal and waiting for Judge Cohen to rule after Monday's hearing.

They wrote that the favorable rulings for Bitfinex and Tether would not help the two companies because they would still be required to hand over the documents.

The lawyers wrote:

"Because the suspension they seek does not necessarily prevent the damage caused by the respondents, they claim that the need to force an order to stop the damage will not be met."


The lawyers also answered a key question at the Monday hearing: whether the NYAG office has the right to investigate.

According to this letter, Judge Cohen has the right to decide on personal jurisdiction.

They wrote: "These issues are entirely within the jurisdiction of the Court and the first department." Lawyers also pointed out that this can be related to the "public interest" of New York residents:

“In terms of the public interest that needs to be proven at this stage, timely disclosure of the materials required in the legal summons is an option that is in the interest of the people of New York.”