A New York judge has punted on deciding whether crypto exchange Bitfinex and stablecoin issuer Tether need to turn over documents and otherwise comply with a state investigation.
The New York Attorney General’s office (NYAG) is looking into allegations that Bitfinex covered up the loss of nearly $1 billion in client funds by borrowing from Tether’s reserves. While the case has been ongoing since April, Monday’s hearing primarily revolved around whether the NYAG had the authority to conduct its investigation.
On Monday, New York Supreme Court Judge Joel M. Cohen said he needed more time to make a final decision on whether to dismiss the NYAG’s case entirely, or rule the other way and reject Bitfinex and Tether’s motion to dismiss. As such, a preliminary injunction he filed in May will be extended, probably for 90 days.
“I will extend the injunction … if I dismiss the case then obviously the injunction goes with it. If I don’t dismiss the case the injunction will be extended,” Cohen said, adding:
“The idea is to keep things where they are until the decision of this motion, so the decision is to extend the stay and … extend the injunction.”
The ruling means Bitfinex and Tether can continue operating their businesses as normal, but Tether still cannot lend any more funds to Bitfinex.
The case to date
Stepping back, the NYAG’s office claims that Bitfinex covered up the loss of $850 million held by a payment processor by borrowing from Tether’s reserves, and is trying to obtain documents pertaining to the loan.
The crypto exchange and stablecoin issuer, which share key executives and ownership,