New York Judge Grants Bitfinex’s Motion To Modify Injunction

News | May 17, 2019 By:

Crypto exchange Bitfinex has announced that a New York Supreme Court judge has granted its motion to modify an injunction obtained by the New York Attorney General (NYAG).

On April 24, the NYAG office accused Hong Kong-based iFinex Inc., which operates Bitfinex and owns Tether, of co-mingling funds from Tether with exchange monies to disguise $850 million in missing funds. NYAG Letitia James said she has a court order directing iFinex to halt moving money from Tether reserves to Bitfinex, stop any dividends or other distributions to executives, and to surrender information and documents on its transactions.

On May 5, iFinex filed a response claiming that the court order was “based on incomplete or incorrect facts and the wrong legal standard.”

“The undisputed facts show that there was no ongoing fraud, and no “victims” in need of the drastic remedy of an injunction to protect them,” iFinex said. “Specifically, there is no dispute that Tether disclosed that its reserves could consist of loans to affiliates, and did so before the line of credit transaction the Attorney General challenges. Nor does the Attorney General dispute that Tether holders, armed with this information — and now further armed with the information disclosed by this proceeding — have been free and able to redeem or sell their tethers at any point (including now), and that Tether has ample reserves to meet the demand. Given these facts, no useful purpose is served by the preliminary injunction.”

In a press release, Bitfinex said that Joel M. Cohen of the New York Supreme Court granted Bitfinex to modify the injunction because the original injunction was “vague, overbroad, and not time-limited.” The court order will reportedly allow Bitfinex and Tether to continue their normal business activities. It also stipulates that the injunction will expire in 90 days and that the burden to seek any renewal from the court rests squarely on the shoulders of the New York Attorney General’s office.

“The Court finds that the preliminary injunction should be tailored to address OAG’s legitimate law enforcement concerns while not unnecessarily interfering with Respondents’ legitimate business activities,” Cohen said.

Bitfinex said that they are grateful that Judge Cohen recognized, in argument before his court, that the original injunction obtained by the NYAG was “both amorphous and endless,” and that it needed to be “as narrow as possible.”

“We believe that the court’s decision today leaves no doubt that both Tether and Bitfinex are entitled to run their businesses in the ordinary course, even during the short period when this now narrowed preliminary injunction is in place,” Bitfinex said. We will vigorously defend against any action by the New York Attorney General’s office, and we remain committed, as ever, to protecting our customers, our business, and our community against their meritless claims.”