‘Not Even Virtual Currencies Are Above The Law:’ NY Attorney General After Court Rules Bitfinex Must Face Lawsuit


A state appeals court ruled on Thursday that the cryptocurrency exchange Bitfinex must face the allegations made by New York state that it hid the loss of its corporate funds.

In April 2019, New York Attorney General Letitia James accused companies connected to Bitfinex of hiding the loss of more than $800 million in client and corporate funds and then used the money from stablecoin Tether to cover the loss.

The funds were deposited with a Panama-based company called Crypto Capital Corp., which were then seized by authorities in various countries. The companies have also said that they are working to recover the funds.

The popular stablecoin Tether is a conduit for trading cryptos, and according to Tether Transparency, over $9.9 billion USDT has been issued to date, 60.5% of which are issued on Ethereum blockchain.

“Not even virtual currencies are above the law,” said James in a statement.

The appeals court rejected the argument that Tether is not a commodity or security and that the court has jurisdiction over its issuer. Tether shares the parent company iFinex with Bitfinex.

The court further rejected companies' argument that they shouldn’t be answerable to New York authorities or provide them with certain documents because they are not based in New York or serve local traders.

According to the court, the New York traders had used Tether and some of the staff of the companies’ have also worked in the state.

“The trial court properly rejected the attempts by respondents to limit petitioner’s lawful authority to protect New York residents,” the opinion said.

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