Update on the case Bitfinex and Tether for alleged manipulation

  • The Attorney General of New York continues to lobby the New York Supreme Court in the case against Bitfinex and Tether.
  • Both sides presented their arguments in defense or dismissal of the case.

In CNF the events surrounding the case against the exchange of cryptocurrencies and the stablecoin Tether have been closely followed. Both entities have been the subject of lawsuits following the publication of a study. This report allegedly verified the participation of the entities in the manipulation of the Bitcoin price.

The entities have described the lawsuits as an opportunity for “mercenary lawyers” to make a profit. About the study they have said that their methodology is wrong and their conclusions are false.

The People vs. Bitfinex and Tether: arguments of the parties

One of the lawsuits against Bitfinex and Tether was brought in the Southern District of New York by Roche Freedman LLP. Now, the New York Attorney General’s Office (NYAG) has introduced a document into the highest legal entity in that state.

The document was introduced on 4 December of the current year. Bitfinex and Tether would have provoked this response by requesting an appeal to the institution concerned.

In the document introduced by the State of New York on behalf of the Attorney General, it is clarified that the accusation is being made about the Martin Act. This law would sanction the alleged fraud committed by the exchange of cryptocurrencies.

In addition, the state seeks to produce an order for defendants to provide documents, records, and information necessary for the ongoing investigation. The state is also seeking approval for a preliminary injunction to

(…) maintain the status quo and prevent further hurting investors in New York.

The state’s argument is that Bitfinex would have used Tether to influence the market. The accusation is directly linked to the conclusions of the aforementioned study:

The purpose of § 354 is to uncover facts to support OAG’s future, unfiled claim. The law is clear that OAG need not definitively establish a violation of New York law at this stage.

A new precedent for Bitfinex

Bitfinex defended itself by establishing that its contact with U.S. territory is limited. Therefore, their acts cannot be judged by U.S. institutions. However, the OFG seems to have found sufficient arguments to pursue the case.

The regulator and the Attorney General’s office argue that they can prosecute any person, institution or entity that violates U.S. law in at least these cases.

Tether also defended itself against the New York State’s accusations:

At the end of the day, the Attorney General has not identified any victim in this whole proceeding, because there is none.

The result of this case will have important consequences for Bitfinex. However, it appears that the precedent they may set could affect the entire cryptocurrencies market.

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Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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