Troubled crypto company iFinex has seen its latest legal challenge to action brought against it by the New York Attorney General dismissed by the courts, clearing the way for a full-scale investigation into its affairs.
The parent company behind controversial crypto exchange Bitfinex and the troubled Tether stablecoin will now be subject to the legal action brought by the Attorney General, after a judge failed to grant relief.
As a result, the firm will now be compelled to submit documentation before the courts, as part of the Attorney General’s investigation into the cover-up of an alleged $850 million black hole in the company’s finances.
Tether issued a statement in response to Monday’s ruling, saying that they are “disappointed” but will file an appeal as they “continue to vigorously defend against any action by the New York Attorney General’s office.”
Any assertion that we have misled our customers about Tether (USDt), its backing, or about the negotiated transaction between Bitfinex and Tether is false. We remain committed, as ever, to protecting our customers, our business, and our community against the Attorney General’s meritless claims.
After losing roughly $900 million in client funds through an errant offshore bank, Bitfinex is alleged to have drawn on capital from sister company Tether to plug the gap. However, the reserves in Tether were held as collateral for the stablecoin, which was widely promoted as being pegged 1:1 with U.S. dollar reserves.
The move attracted the gaze of the New York Attorney General, which since raised an action against iFinex into an alleged misappropriation of funds.
iFinex continues to challenge the premise of the investigation, and took the matter to court, citing a lack of jurisdiction.