The case brought against Tether and Bitfinex by the New York Attorney General (NYAG) continues to move forward. On top of questions over the relationship between the cryptocurrency firm and the crypto exchange, questions regarding illegal operations being conducted by the two in the state of New York have arisen. It appears that, despite public comments to the contrary, Tether and Bitfinex have been serving New Yorkers much longer than it previously appeared and in violation of state laws.
Tether and Bitfinex have tried to argue for the dismissal of the case because they don’t have anything to do with New York and that “the businesses do not allow New Yorkers on their platforms and do not advertise or otherwise do business here.” The NYAG set out to determine whether or not this was true and has returned with evidence spanning over 28 separate exhibits proving the two were lying.
The evidence shows that New York customers have logged onto Bitfinex site as recently as December 18, 2018. Another piece of evidence shows Bitfinex in talks with Galaxy Digital to try and get the crypto firm to sign up as a Bitfinex customer last October. Bitfinex was also found to have accounts held by two banks in New York—Noble Bank and Signature Bank—in addition to at least “one other New York-based financial institution during the relevant time period, which they used to transfer money to and from clients of the Bitfinex and Tether platforms.” Noble Bank is the same name as the bank that Tether used to use for its fiat stores before seeking a new bank last year.
The NYAG’s office adds in its court response, “Respondents have repeatedly engaged New York firms to assist them in their business objectives, including to make statements to the markets about the operation of the Bitfinex trading platform and the cash backing of tethers; and as recently as 2019, Respondents opened a trading account with at least one New York-based virtual currency firm.”
The NYAG is now also calling out Bitfinex for its recent initial exchange offering, which it asserts is a clear example of a securities issuance. The offering, which allegedly picked up over $1 billion in investment funds, has reportedly been available to New York residents in violation of state laws.
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