Business

Erik Gibbs

Bitfinex loses latest round against New York’s Attorney General

Bitfinex’s attempt to assert that New York has no jurisdiction over its operations, since it allegedly doesn’t operate in the U.S., has been rebuked. In pleading its case in response to a lawsuit brought against it by the New York Attorney General’s office, Bitfinex tried to have the New York State Supreme Court dismiss the suit over the lack of jurisdiction. However, the Supreme Court has denied the request, allowing for the ongoing dispute involving Bitfinex, Tether and New York Attorney General (NYAG) Letitia James, to continue.

Judge Joel Cohen has denied a motion filed by Bitfinex to terminate the NYAG’s actions against the company. That action seeks to prosecute Bitfinex under the Martin Act, a New York law that covers financial and securities fraud. It gives the Attorney General the authority to conduct investigations and prosecute accordingly if any suspected fraud has been identified. James has gone after Bitfinex for its questionable financial arrangements with the Tether stablecoin project and an $850-million loan that it received from Tether.

Judge Cohen writes in his decision (in pdf), “Respondents seek to terminate this Martin Act action on the ground that the Court lacks personal and subject matter jurisdiction. 1 Specifically, they contend that their businesses (mainly, an off-shore cryptocurrency exchange and a “stablecoin” currency called “tether” purportedly backed by U.S. dollar reserves) do not have a connection to New York sufficient to trigger personal jurisdiction. They also contend that Petitioner’s “extraterritorial” investigation into their business activities (which they claim does not involve “securities” or “commodities”) is beyond the scope of her enforcement authority under the Act, and thus this Court does not have subject matter jurisdiction to facilitate that investigation.”

Citing several legal cases, Cohen was able to justify his reasoning for denying the stay request. As a result, the NYAG will be able to continue her case and Bitfinex will just have to suck up the monetary losses it will incur from defending itself.

Bitfinex has repeatedly argued that it doesn’t allow any U.S.-based access to its exchange. This, despite the fact that there has already been irrefutable evidence presented to the contrary. The company hasn’t done itself any favors by trying to skirt around the truth and will have to allow the case to run its complete and natural course.

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