Business

Erik Gibbs

Bitfinex denies claims it services US-based customers

The New York Attorney General (NYAG), Letitia James, has been gunning for Tether and Bitfinex, arguing that the cryptocurrency companies have colluded to bypass financial regulations. She has also asserted that the two have been allowing customers in the U.S. to utilize Bitfinex’s trading platform, despite not having the legal authority to do so. Two weeks ago, James produced documents that showed how Bitfinex was engaged in unlawful trading in the U.S., and the exchange has now come forward to public deny those claims.

Bitfinex presented documents in court this past Monday that refute those claims. The documents read, in part, “OAG [Office of the Attorney General] tries to confuse matters by referring to isolated instances where Respondents’ foreign customers have shareholders or other personnel in New York. But in those circumstances, Respondents’ counterparties — the ones with which Respondents actually transacted business — are the foreign entities.”

Tether and Bitfinex have argued that the customers indicated by the NYAG were, in fact, foreign eligible contract participants (ECP) that are allowed to be serviced by the exchange. They had previously asserted that the New York courts have no jurisdiction over the dispute since they didn’t operate in New York, a claim James countered when she produced her documents earlier this month.

Now that Bitfinex has provided the court with documents in an effort to show that it doesn’t permit U.S.-based customers, it is once again looking for the courts to back down and bring a halt to the proceedings. It also asserts that Tether cannot be held to any violations of the Martin Act since it doesn’t qualify as a commodity or a security. The Martin Act, also known as New York General Business Law Article 23-A, Sections 352-353, was implemented to curb fraud in the state. It gives the NYAG law enforcement privileges associated with investigations of securities fraud, and also allows the NYAG Office to bring charges against those who violate the act.

The case will continue at the end of the month when the NYAG will most likely offer a rebuttal to the most recent information provided by Bitfinex. James will also need to try to produce evidence to support the belief that Tether is a security, which would allow the case against the two entities to continue.

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