Bitfinex operator questions NYAG’s jurisdiction in the alleged $850M fraud case

iFinex Inc., the parent company of crypto exchange Bitfinex and stablecoin project Tether, has filed its response to the New York State Attorney General’s (NYAG) Memorandum of Law, in which Letitia James requested the disclosure of the documents relating to the deal made between Bitfinex and Tether in the alleged $850 million cover-up.

In its response, filed on May 05, the company said the court order obtained by the NYAG was issued “based on incomplete or incorrect facts and the wrong legal standard.” Bitfinex and Tether are now seeking to vacate the court order.

iFinex has claimed that there was no fraud and no victims that the injunction is trying to protect.

The company further states that the Attorney General did not explain how Tether (USDT) qualifies as securities or commodities covered by the “Martin Act.” It also questions the Attorney General’s jurisdiction in the matter, saying:

“The Attorney General should not be afforded the drastic remedy of a preliminary injunction, or an order requiring the Respondents to address blunderbuss document demands, without establishing the basis for its authority to even regulate in this sphere.”

The company further pointed out that the injunction freezes more than $2 billion of Tether’s reserves, and prohibits “any investment of any kind into the indefinite future”, which will disrupt its activities.

“This massive regulatory overreach has no corresponding benefit,” it said.

Importantly, iFinex argued that Tether has already disclosed that its reserves could consist of loans to affiliates, and did so before the line of credit transaction which is being challenged by the Attorney General.

It further emphasized that “there is no duty for Bitfinex to disclose its internal financial matters to customers,” adding that the Attorney General misused the term “investor” in place of “customers” of Bitfinex and Tether, who are “not entitled to disclosure.”

In the wake of the ongoing legal battle, crypto data provider CoinMarketCap has excluded bitcoin prices provided by Bitfinex from its weighted average calculation of the cryptocurrecncy, CoinDesk reported.