The New York State Supreme Court, represented by Judge Joel Cohen, ordered Bitfinex to provide the State Attorney's Office with documents on the loss of access to fiat funds for $ 850 million and upheld a injuction that does not allow Tether Limited to use its reserves for lending the exchange and other investment activities. This is reported by the CoinDesk.
The court recognized that the claims of the prosecutor’s office should be reviewed as not accurate enough to demonstrate the damage caused. Thus, during the week, the parties must jointly or unilaterally submit to the court a plan of changes to the text of the original injuction.
Judge Cohen emphasized that the question of whether the USDT is a security remains open. He asked the prosecutor's office to conduct a more thorough investigation and explain exactly how Tether Limited and Bitfinex violated the Martin Act (Martin Act) against fraud.
The question of whether these are securities, … is a threshold question that the respondents [mentioned]. I know they are traded, but whether [they qualify] is [another matter]. I recognize the point that banks don’t have all of the dollars available at a moment’s notice. I also recognize that you’re not banks, you’re not heavily regulated.
Judge, New York Supreme Court
The attorney’s office insisted that it had the right to regulate Tether’s activities, since USDT tokens are available for purchase by residents of New York on the secondary market through the Poloniex exchange.
We have enough information to know, and we have every reason to believe, that the Martin Act has been violated.
Lawyer, New York Attorney General’s office
In late April, the Prosecutor General’s Office in New York for the first time reported receiving a court order against Bitfinex in connection with the alleged loss of the last $ 850 million and the concealment of this fact from market participants.
Representatives of the trading platform said that we are not talking about permanent loss. These funds are frozen in bank accounts of Panamanian processing Crypto Capital Corp. in four countries.
To ensure liquidity, Bitfinex was forced to ask Tether Limited for a loan and, according to the Prosecutor General’s Office, has already received $ 750 million from the company's reserves. In this department reviewed the composition of the crime.
Earlier, New York State Attorney General Letitia James asked the court to uphold the order. She warned the court about the high risks for Bitfinex users and USDT holders.