By Major cryptocurrency exchange Bitfinex has won a ‘stay’ in the New York Supreme Court. This basically means that Bitfinex may not now, or ever be asked to furnish documents that give an account of what they did with $900 million of Tether (USDT).
History of the motion filed
Bitfinex is a HongKong based cryptocurrency exchange. Their problems began in April 2019 when Letticia James, The Attorney General of the state of New York indicted Bitfinex. The original indictment was concerned with the internal use and commingling of funds, as well as the Bitfinex’s relationship with Tether (USDT).
Initial Charges against Bitfinex
There were serious charges laid out and framed in the original indictment filed by the New York State Attorney General, Letticia James. She accused that (USDT) Tether was effectively acting as a “mint machine printing money” for Bitfinex. She further pointed out that Bitfinex and Tether (USDT) had a really close and mutually beneficial association between themselves. According to the original indictment, this close relationship allowed the Hong-Kong based cryptocurrency exchange Bitfinx to use the newly launched and minted Tether (USDT) internally.
Bitfinex then allegedly used as much as $900 million of those funds to run the exchange. This cross-use of funds is illegal and considered commingling of company funds with investor funds.
What’s the current status?
There was a lot of noise after the news broke and crypto coin users were sceptical about Bitfinex for a considerable period of time. Surprisingly Bitfinex is yet to receive any kind of official notice or complaint from the state of New York. This came as a relief to Bitfinex as the presiding judge in light of no complaint ordered that Bitfinex no longer needs to produce documents with the New York state prosecutors. A stay has been put and awarded to Bitfinex.
The order now means that no further information is required from Bitfinex or its controlling parent company, iFinex. This basically means that the investigation is going to come to an unwanted half.
However, a motion to dismiss the case had been denied by the presiding judge in August 2019.
What’s happening at Bitfinex after the indictment?
The future for Bitfinex remains unknown and unclear while the case continues in a court at the state of New York. Users have lost trust in the exchange and their trading volumes have continued decreasing. The cryptocurrency market seems unforgiving to Bitfinex as of now.
Prior to the indictment, Bitfinex regularly traded more than 100,000 BTC per day. Since the prosecution, that number has fallen to just 3,000 BTC—a loss of 97%.
The drop in volume may have multiple causes. While the loss of confidence in the exchange is largely to blame, the overall cryptocurrency market is also dramatically less robust than it was in April.
Bitfinex seems like taking the fight serious and only time will tell whether there is a dismissal of charges laid against them. The victory though may come too late for them.
Comments