Bitfinex and Tether call out New York’s AG; claim they do not have duty to inform customers of all matters

Bitfinex and Tether call out New York’s AG; claim they do not have duty to inform customers of all matters

The Bitfinex-Tether fiasco took a new turn after Bitfinex and Tether released an official response to the allegations made against it by the New York Attorney General’s office. Bitfinex’s and Tether’s parent company, iFinex, moved to vacate the court order, claiming that the order was based on ‘inaccurate or incorrect facts and wrong legal standard’.

The response also questioned it being issued ex parte in the first place. The court order claimed that the two companies were involved in hiding losses worth $850 million. However, Bitfinex and Tether denied any ongoing fraud on their part.

A document filed on May 5 by iFinex argued that New York’s AG failed to explain the qualifications passed by Tether to be termed as a security or a commodity and under the Martin Act of 1921, would provide the agency’s authority over the firm. The document highlighted that AG would need that basis of authority “to even regulate in this sphere” and require Tether and Bitfinex to “address blunderbuss document demands”.

The parent company argued that the order was ‘hugely disruptive’ as it froze Tether’s reserves of $2 billion and prohibited any investment of any kind indefinitely, even though Tether had disclosed that its reserve could consist of loans before the line of credit. Tether had also informed users to redeem or sell their USDT if they wished to do so. However, the document noted that it has ‘ample’ reserves to ‘meet the demand’.

The document also stated that the “massive regulatory overreach has no corresponding benefit” because there was no fraud and “much less harm that is either ongoing or irreparable”. Bitfinex also responded to allegations of keeping the customers uninformed about a certain aspect, stating that it did not have the duty to inform its customers of  “all matters customers would find material”.

iFinex pointed out New York Attorney General’s mistake in talking about Bitfinex and Tether customers as “investors”. The document argued that they were not investors and “not entitled to disclosure”. The companies further argued that a preliminary order would just cause inconvenience for them and not protect anyone.

The post Bitfinex and Tether call out New York’s AG; claim they do not have duty to inform customers of all matters appeared first on AMBCrypto.

Published at Tue, 07 May 2019 17:08:44 +0000