The final is coming, Bitfinex responds to the allegations in detail, the last fight before the hearing

The battle between the New York Attorney General's Office (NYAG) and Bitfinex and Tether has entered a period of intense heat.

In early July, the Office of the Attorney General of New York (NYAG) issued a report on the illegal issuance of securities by Bitfinex and Tether. As a result, Bitfinex, Tether and its affiliates must submit a response to NYAG's latest motion by July 22, and the hearing will be held on July 29.

Prior to this, NYAG has already implemented various allegations and suppression on Bitfinex and Tether. These include: $850 million in losses, doubts about the Tether reserve, lack of transparency, suspected fraud, misappropriation of funds, illegal provision of investment products, and bans.

In the face of the crackdown on the regulatory authorities, Bitfinex has been more than one tit-for-tat. Bitfinex has also clarified its own "innocence" while claiming that it will vigorously challenge NYAG's ultra vires behavior.

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Just yesterday, the last day of the response from Bitfinex and Tether, in the face of various questions from the Office of the Attorney General of New York, Tether General Counsel Stuart Hoegner issued a new statement, again to NYAG in a near-face-to-face manner. The complaint was made in an unusually detailed and tough response.

The following is a summary of the "Declaration", organized by shared finance:

1. The customers of Bitfinex and Tether are the foreign entities themselves.

According to the terms of service of Bitfinex and Tether, eligible contract participants ("ECPs") that trade with Bitinex 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 associated with the United States or New York, the clients of Bitfinex and Tether are themselves foreign entities.

Bitfinex and Tether do not have the ability to control the shareholders or personnel of ECPs at any time. Bitfinex and Tether do not trade with any New York ECPs. New York Attorney General Assistant Brian Whitehurst's statement of July 8, 2019 or all transactions or virtualities mentioned in the OAG (New York State Attorney's Office) legal memorandum of July 8, 2019 Currency companies refer to foreign entities.

(Note: Earlier, the New York State Attorney General’s Office filed a complaint that “Bitfinex and Tether have been serving customers in the New York area.”)

2. OAG's legal memorandum and Whitehurst's testimony distorted the facts

OAG's legal memorandum and Whitehurst's statement contain some inaccuracies and misleading assertions about the activities between Bitfinex, Tether and the United States. I will discuss a few of the following evidence:

OAG said, “In December 2017, Bitfinex and Tether invested millions of dollars in a nobility affiliate operating in New York.”

This statement is incorrect and misleading.

In fact, the entity associated with the institution is Delaware LC. This investment has nothing to do with the sale, purchase or redemption of tether, and is not related to OAG's claim in this case. The investment is completely independent of DigFinex Inc. and Tether (the company) or Tether (virtual currency).

OAG said, "Bitfinex and Tether lend Tether to a trading company in New York.

This is misleading. First, the borrower is a foreign entity. Second, the loan was fully repaid in April 2019. I don't see OAG's allegations in this matter (it is said that the customer was misled on the "support" issue of tether) and there is any connection between the loan that is now closed.

OAG also said, "In January 2019, Bitfinex opened an account, a New York-based virtual currency trading company licensed by the New York Financial Services Department."

These statements are also misleading. The administrative purpose of the account is solely to facilitate the loan between BFXNA Inc. and the above entities. This account does not involve any Tether transactions.

OAG claims, "The documents show that Bitfinex and Tether assisted some (New York) traders in establishing foreign shell entities and becoming nominal account holders – a type of so-called 'prohibition' (New York customers) Workaround."

There is no way to work around. The above documents show that we only do business with foreign entities that do not have a business presence in New York. There is no discussion that the entity is a "shell" or just a "nominal" customer.

OAG also said that Giancarlo Devasini (Bitfinex executives) "represented a trading company in New York." The latter is required to provide an extension of several months to withdraw cash, and it is recommended to use encryption capital to speed up the extraction. ”

(Note: On April 25 this year, the Office of the Attorney General of New York stated in a press release that Bitfinex lost $850 million and subsequently used Tether funds for secret remediation. In support of New York State Attorney General Letitia James for Bitfinex and Tether In the litigation file, the chat records of Bitfinex executives (codenamed "Merlin" is actually Devasini) and Crypto Capital's partner (codenamed "CCC") show that Merlin has repeatedly stated that his cash reserves are already low, so Need CCC's help. For details, see "Explosive Thunder | $850 million misappropriation case, exchange and procuratorate smoke"

These allegations and the relevant evidence of the Whitehurst confirmation all relate to the same entity, and OAG’s statement to the entity is untrue. This entity is a British entity.

In addition, OAG incorrectly pointed out that Mr. Devasini “recommended the use of Crypto Capital to the entity in January 2019.” In fact, the statement was made in October 2018, when the companies did not actively inform law enforcement agencies of them. The problem and the attendant concerns associated with CryptoCapita.

OAG said, "In October 2018, Bitfinex and Tether'onboarded' the virtual currency company Galaxy Digital LP, which is located at 107 Grand Street, New York.

It is worth mentioning that although 107 Grand Street is the office address of the entities mentioned in the Whitehurst Confirmation, each entity is a foreign ECP.

Whitehurst’s statement attached an exhibition reflecting “a professional trading company logging in on the Bitfinex trading platform (from New York) from November 7, 2017 to May 4, 2019”.

The trading company is one of the same entities mentioned in the Whitehurst Confirmation. Again, this entity is an external ECP.

Whitehurst’s statement attached “File…About the 'validation' of traders on the Bitfinex trading platform.” The statement stated that “the respondent knew that the trader lived in New York and traded in New York”.

This description is misleading because the client in question is a foreign ECP.

Whitehurst’s statement indicates that Noble Bank’s residency is the same as Noble Mrakets Lcc.

This is not accurate. Bitfinex is headquartered in and operating in Puerto Rico during New York's opening of Noble Bank, not in New York.

In any case, Bitfinex and Tether closed their bank accounts in October 2018.

According to OAG, “From 2014 to 2018, one of the most senior executives of respondents…” During the relevant period, several individuals or entities operating in New York or in New York were shareholders of the defendant iFinex Inc. ”

The reality is that the mentioned executives left the two companies in the summer of 2018. In addition, certain shareholders may live in places that are not related to OAG’s allegations.

3. Tether ceased to serve Americans in November 2017

OAG claims. "Until November 27, 2018, Tether's Terms of Service explicitly prohibited New York individuals or entities from redeeming Tether."

This statement is misleading.

On January 30, 2017, Bitfinex prohibited New York customers from trading on the platform in accordance with the company's terms of service. Around August 2017, Bitfinex extended this focus to all US individual customers. August 2018. Bitfinex prohibits all US entities and/or corporate customers from trading on this platform.

In November 2017, Tether ceased to provide services to customers outside of Bitfinex. Therefore, as of the date, customers can only purchase and redeem tether through the Bitfinex platform, and must comply with Bitfinex's restrictions on accessing the platform.

At the same time, Tether stopped serving all customers in New York.

On January 1, 2018, Tether amended its Terms of Service to explicitly prohibit the distribution of products to any US customer. At least on November 27, 2018, Tether further revised the Terms of Service to prohibit all Americans from entering the country.

Therefore, by November 27, 2018, Tether had already imposed its own ban in the United States (including New York) when Tether again allowed customers to purchase and/or redeem Tether directly.

4. In April 2018, Bitfinex and Tether closed their accounts at Metropolitan Bank and Signature Bank.

OAG means that the two banks are headquartered in the United States.

However, these relationships end before any related things happen.

Bitfinex and Tether opened an account at Metropolitan Bank around December 2017. The account was closed on February 28. The Bitfinex account was closed on April 30, 2018.

Bitfinex and Tether opened an account at signature bank around February. Both accounts were closed in April 2018.

5, Bitfinex and Tether are not for New York consumer marketing  

In November 2017, Bitfinex and Tether hired a New York-based communications company to help the public respond to allegations in the online cryptocurrency community.

Contrary to OAG's jurisdictional claims. Bitfinex and Tether have never sought the help of any communications company to target New York customers or to address issues related to New York consumers. This contact has nothing to do with OAG's allegations in this procedure.

OAG claims that specific personal jurisdiction exists because these companies employ Friedman LLP (an accounting firm) and Freeh Sporkin & Sullivan LLP (a law firm).

Contrary to OAG's statement. The results of Friedman LLP and Freeh Sporkin & Sullivan LLP were not "published to the New York market."

Friedman LLP and Frech Sporkin & Sullivan LLP were not hired to help these companies target New York consumers, and the purpose of these comments was not for New York consumers. These supplier relationships have nothing to do with OAG’s allegations in this lawsuit.

6. The business of the two companies has nothing to do with Tether on other platforms.  

To a certain extent, Tether can be traded on US platforms, as described by OAG, and any such transaction by Poloniex or Bittrex is part of the secondary Tether market, while Bitfinex and Tether have no control over the secondary Tether market, and Not related to the business of Bitfinex or Tether.

The businesses of these companies do not rely on or target consumers who may trade Tether on platforms in the US secondary market.

OAG also claims that “at least two virtual currency tokens currently traded on the Bitfinex trading platform are issued by a New York-based virtual currency company.”

OAG tried to throw everything on the wall without any evidence or document support, nor did it provide any information about the virtual currency tokens involved in or involved in OAG's allegations.

But this does not change the fact that these companies are not Bitfinex or Tether customers. Other tokens traded on the Bitfinex trading platform are not related to the OAG survey.

7. Bitfinex's IEO project: LEO

In May 2019, iFinex participated in the first transaction (IEO) of the LEO token (LEO token).

This is similar to an initial public offering, through which individuals and/or entities are invited to purchase LEO tokens from Bitfinex in exchange for discounts on Bitfinex platform trading activities and the right to redeem LEO tokens from future earnings.

LEO tokens are not open to the public and are not available to any US customers or foreign ECPs with US shareholders. In addition, LEO tokens do not allow any US company to trade on the Bitfinex platform.

LEO token holders can redeem from ongoing business income or receive discounted transaction activity on the Bitfinex platform. In addition to these standard redemptions and discounts, Bitfinex will redeem and burn the corresponding number of outstanding LEO tokens at a rate equivalent to 95% of the net recovered funds, within the scope of Bitfinex's recovery of funds from Crypto Capital ($850 million). Applicable net amount)

Contrary to OAG's claim, this repayment and redemption arrangement does not prohibit Bitfinex from paving the way for the current loan arrangement agreement between the two companies. Bitfinex will use funds from current business profits and raise funds from independent industry organizations to repay Tether to meet loan arrangements.

In fact, Bitfinex has done this: On July 1, 2019, Bitfinex repaid $100 million in outstanding loans and all loan interest as of June 30, 2019. Although this amount has not been reviewed, according to the loan facility agreement, Bitfinex paid the amount in advance in the form of legal currency based on its financial status at the end of the agreement.

The repayment of this loan proves that Bitfinex is in good financial condition and is still growing. OAG's alleged concern about tether "support" is unfounded. To this day, Tether can redeem the Tether holder without any difficulty—no, no, no.

8, Bitfinex and Tether submitted a lot of data information

OAG made false statements about the nature and extent of the business information of respondents in accordance with the order of May 21, 2019.

(Note: On May 21, Bitfinex and Tether asked the New York State Supreme Court to suspend NYAG's “heavy” request for documents from Bitfinex and Tether. Prior to this, the New York State Attorney General's Office asked Bitfinex to disclose the Tether transaction file and received the New York State Conditional approval by the District Court.)

OAG claims: "It appears that Bitfinex and Tether did not submit to OAG an unverified account for… (on the Bitfinex platform), including information about any individuals or entities located in New York."

But this is not the case: in fact, Bitfinex and Tether provide a lot of data and files. These files are related to unverified users of the Bitfinex platform.

OAG also incorrectly stated that Bitfinex and Tether did not confirm the evidence to Whitehurst in accordance with the provisions of May 21, 2019.

In fact, the respondents submitted these documents to OAG on July 2, 2019.

Contrary to OAG's suggestion in Whitehurst's affirmation, Bitfinex and Tether have been working hard to comply with the court's jurisdictional discovery order. To this end, Bitfinex and Tether provided OAG with a large amount of data, including approximately 70,000 pages of files – 15 custodians involved in 10 different communication formats.

Declaration link: https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=6drrB8uhuIMbaGMj5Nsd4g==

Original: Sharing Finance Neo

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