Allegations were made by the NYAG that Bitfinex made up for its losses by borrowing funds from Tether. The scenario is more interesting bearing in mind that the two have similar leadership and ownership positions.
Bitfinex and Tether which both come under the parent company iFinex, are on the move in ensuring that the case with NYAG is dismissed. Lawyers from the two companies argue that the New York Supreme Court lacks sufficient evidence over the ongoing case by NYAG.
This argument is seen by some as realistic bearing in mind that the two operate their businesses far from New York hence it does not harm the state in any way. The two parties insist on the court not to hold any allegations basing their argument on the areas of operation.
Tether has had a number of allegations dating back from the year 2007. Analysts and members of the public have been questioning the exact holdings of the company holdings and also the USDT dollar backing.
History has it that the stable coin company accounted for each USDT coin 1:1 with U.S. Dollars. This could add up to about $2.9 billion held in the bank for money circulatory issues. This claim did however not go well with the investors in the cryptocurrency market which through a number of investigations, realized that Tether secretly removed its claim to back the USDT with the U.S. Dollars.
Bitfinex Company which is situated in Hong Kong has had a number of complaints from clients who in a way or another complaint about losing their money. The company has faced a number of hackings ranging from $400,000 in the year 2015 and $73,000,000 in the year 2016.
In relation to NYAG’S case, Bitfinex continues to refute the claims on it insisting that NYAG has no legal evidence to pin it. The NYAG however still insists on its stand which aims to get clear clarity on the $850 million.
The court through NYAG insists that if Bitfinex is allowed to continue digging Tether’s reserve, chances are that the money will not be able to be recovered. A response by NYAG through Justice Debra James has ordered the company to produce the related documents for investigations.
On Monday, attorneys from both sides failed to come to an agreement on what Tether as a company should be permitted to do with its shares. NYAG through its office aims to prevent any transaction whatsoever for a 90-day period. This is to provide time for further investigation and avoid tampering of the evidence.
The NYAG’S attorneys, however, said that the shareholders of Tether should be allowed to convert the tokens in exchange for money.
Tether and Bitfinex through their lawyers, however, want an injunction of 45 days so as to allow the related entities to be able to redeem what they find fit. Bitfinex recently revealed that Tether was an investment of Bitcoin and other related assets which were a portion of the 1 USD estimated value of its stable coin.
This allegation led to Joel M. Cohen, a Supreme court Judge to respond saying that Tether was like a cooling effect in the cryptocurrency trading and questioned its consistency if it maintained backing from Bitcoin. It is speculated that reconciliation is expected of the two parties by the judge but the date and time remain a mystery.