Bitfinex Pleads To Judge Why Dismissal In NYAG Case Is Warranted Due To No Customers In The State
Bitfinex Argues That Judge Should Dismiss NYAG Case
The Bitfinex/Tether case has reached a new point right now. The representant for both companies has decided to ask the current judge of the case to dismiss the case created by the New York Attorney General against the company.
What is their reason for this? The company does not have any customer in the New York state, so it would be outside of the NYAG’s jurisdiction to actually judge what the company should or should not do.
Both companies, which have overlapping owners and managers, are being represented by the same lawyer, which asked the Judge Joel M. Cohen to decline the onerous request of the NYAG for having documents of the company.
The attorneys representing the companies, Jason Weinstein and David Miller, argued that these companies have basically nothing to do with New York investors and that they do not allow them on the platform at all. Therefore, there would not be any local “victims” from what happened, in their view.
Also, the NYAG is using a local law, the Martin Act, to sue Tether. If there are no clients from the state, a local law should not be used to judge the company, it seems.
We cannot deny that it is a strong argument. However, Tether is actually suffering a lot from all the fallout of the accusations, so there is some reason in believing that the company will not be so fast as to escape unharmed from the whole discussion.
More Trouble: Tether Backed With Bitcoin
The other big problem that Tether has run into is that one of the attorneys let it slip that the company invested in Bitcoin. This was a very controversial move as Tether is supposed to be a stablecoin. The company needs stable prices in order to surive in the market and Bitcoin is everything but stable.
A cryptp media outlet called The Block Crypto reported on this story and it affirmed that this was a notable admission that Tether never actually held the 1-to-1 USD reserves that the company claimed to have.
Sure, we are in a bull market right now and the prices are going up a lot, but it has to be noticed that volatily can be pretty quick with cryptos, so this is no reason to believe that BTC is any kind of a safe investment for a company which was supposed to be stable.
In light of this new revelation, the situation seems worse and worse for Tether. The judge affirmed that Tether was supposed to be a calm in the storm, but that by investing in Bitcoin the company sort of became a part of the crypto storm itself. In his view, it was a very inconsistent move to invest in BTC when you promise your investors that your price is pegged outside of the crypto market.
The original case, in case you are not totally familiar with the story, started last month. The NYAG asked to freeze Tether’s funds because they company lended $625 million USD to Bitfinex, which was in financial trouble because Crypto Capital, one of its payment processors, did not pay the money to it.
Crypto Capital is currently also being investigated by the authorities, too, and it is part of the reason why the whole trouble started.
Can Tether go back to being considered a legitimate investment or will the whole controversy affect its status as the main stablecoin in the market? We’ll have to wait and see.