New York State Attorney General Asks For Documents of BitFinex-Tether Deal

By Prashant Jha

Letitia James, the New York State Attorney General, has called for the full disclosure of all documents in existence regarding a deal that was apparently made between crypto exchange BitFinex and Tether, the company behind the stablecoin of the same name (USDT). On the 3rd of May, 2019, Attorney General filed a memorandum of law to this effect.

The memorandum of law has been made to request for a higher degree of transparency and is based on the understanding that BitFinex and Tether were involved in deliberately misleading those clients who had made investments into the project. The statement also detailed why the Office of the New York State Attorney General felt it necessary to ask for a disclosure on those counts. It said:

“While that and other discrepancies do not change the core issues in this case […] they only heighten the OAG’s [Office of the Attorney General’s] need to obtain documents and information in a timely, organized fashion so that the OAG may understand what has taken place, and what continues to take place, at these companies.”

The memorandum also explains its own aim in the following words:

“ [The memorandum] craft[ed] a narrow injunction to preserve the status quo and prevent Respondents from further dissipating the cash reserves that supposedly back the tether virtual currency, pending completion of the OAG’s investigation.”

The memorandum of law also takes care to point out that the existing issues regarding the alleged deal in no way prevents the two companies, BitFinex and Tether, to work like they usually do. They are capable of continuing their conduction of business like they normally do. It said that the memorandum does not prevent them from continuing to “to operate their businesses in the normal course, as they have continued to do since the injunction.”

The crux of the whole affair began back in April, when the Attorney General’s office alleged that BitFinex had misplaced or lost funds worth a massive sum of $850 million. It believed that BitFinex made use of money from a deal with Tether to cover its tracks and try to make up for the shortfall. Both companies then proceeded to vehemently deny the charges to this effect.