Bitfinex and Tether’s Legal Battle: Justice Cohen Extends Injunction

Ongoing Legal Saga: The 90-Day Extension

In an unexpected turn of events that could rival a soap opera plot twist, Justice Joel M. Cohen of the New York Supreme Court decided to extend the preliminary injunction in the case involving Bitfinex and Tether’s parent company, iFinex, against the New York Attorney General’s office. The ruling, made on July 29, grants a 90-day extension for the AG to keep the investigative lights on. Attorneys for Tether, probably hoping for a swift resolution, attempted to argue their way to a quick dismissal. However, Justice Cohen was having none of it, tossing their appeal aside like a basketball player rejecting an easy layup.

Claiming Jurisdiction: A Game of Legal Tug of War

During proceedings, iFinex raised its proverbial flag of surrender—or was it defiance?—by challenging the court’s subject matter jurisdiction. Their claim? Tether is neither a security nor a commodity, mainly due to the lack of a futures market—because who really wants to trade futures in this chaotic crypto landscape? They also emphasized that Tether and Bitfinex operate on different business paths, suggesting that lumping them together was akin to treating apples and oranges as the same fruit. It’s a compelling argument until one remembers that fraud can often wear many masks.

How It All Began: The Unraveling of Claims

This drama kicked off back in April when NYAG Letitia James unleashed scathing allegations, claiming that iFinex and its buddies had defrauded crypto investors in New York. The crux of the issue? An allegedly lost $850 million in client and corporate funds, which Bitfinex attempted to mask by dipping into a cozy $900 million of Tether’s cash reserves. Sounds like a plot from the latest financial thriller, right? iFinex vehemently denounced these claims, labeling them as “riddled with false assertions,” while maintaining that the lost funds were safely tucked away. Sure, guys, whatever you say!

Dismissing the Case: A Frustrating Turn

In its defense, iFinex sought to have the whole affair dismissed—because nothing solves a headache like ignoring it. They contended that the AG lacked the legal grounds to file charges since Bitfinex was not operating in New York during the relevant period. But then, like a plot twist in a suspense novel, news surfaced about the closure of a New York bank account owned by Metropolitan Commercial Bank, raising eyebrows over Bitfinex’s operational status in the Big Apple.

The Argument Continues: What’s Next?

Following these revelations, the legal rollercoaster continued as Bitfinex and Tether’s lawyers filed documents on July 22 insisting that the companies never served New York customers. They further argued that even if they did, the AG failed to prove that any New York-based investors were harmed. “For purposes of personal jurisdiction,” they argued, “OAG cannot show Respondents engaged in any business activity purposefully directed at New York.” It’s a classic case of “not my problem” but with a legal twist that might just keep the courtroom entertained for another 90 days.