A New York judge ruled Bitfinex must face the fraud suit and impending investigation set against it in April by New York attorney general Letitia James, denying the company’s request for the case to be dismissed due to lack of jurisdiction, Bloomberg reported.
Justice Joel M. Cohen said Monday that iFinex Inc., the Hong Kong-based parent company of Bitfinex and Tether, will be tried for James’s allegations that it used $900 million worth of Tether USDT reserves to fraudulently cover an $850 million loss of “co-mingled client and corporate funds”.
Per Cohen’s ruling, the Attorney General will also have access to information blocked by a temporary hold won in court by iFinex in May.
Questions of jurisdiction resolved
The verdict comes as a moment of resolution in a months-long legal clash between Bitfinex and the Office of the New York Attorney General (OAG), who since launching an injunction in April has pursued the company under New York’s Martin Act.
Under the act, the Attorney General is granted “broad powers” to prosecute for securities and commodities laws violations in the famously stern jurisdiction of New York.
The OAG has endeavored through a series of attempts to prove Bitfinex has been operating on its turf, and in early July produced 28 pieces of evidence intended to prove the exchange served New York customers between 2017 and 2019.
Bitfinex has repeatedly challenged the authority of the OAG to prosecute on the supposed grounds it never served residents of New York, and in late July hit back with a legal filing stating that the only New York-based customers served by the exchange were trading through “foreign entities” and thus that the claims of the OAG were “misleading”.