Cryptocurrency exchange Bitfinex granted motion to modify injunction

Cryptocurrency exchange Bitfinex announced on Thursday that a New York Supreme Court judge has granted its motion to modify an injunction obtained by the New York Attorney General (NYAG).

The iFinex Inc.-owned firm said that the original injunction was “vague, overbroad, and not time-limited.” The presiding judge Hon. Joel M. Cohen also allowed Bitfinex and affiliated stablecoin operator Tether to resume their normal business.

In his decision, Cohen wrote that “the Court finds that the preliminary injunction should be tailored to address OAG’s legitimate law enforcement concerns while not necessarily interfering with the Respondents’ legitimate business activities.”

Cohen specifically ordered that (i) Tether cannot loan, extend credit, or transfer assets to Bitfinex or other parties, except in the normal course of conducting business. (ii) Tether cannot distribute any funds or dividends from its reserves to any principal, executive, employee, agent, equity holder, or associate. Only payroll and payment to vendors, consultants, or contractors are allowed. (iii) Bitfinex and Tether cannot tamper, alter, destroy, remove, and dispose of any documents asked for in the NYAG’s original subpoenas.

“We are grateful that Judge Cohen recognized, in argument before his court, that the original injunction obtained by the New York Attorney General was both amorphous and endless and that it needed to be as narrow as possible,” Bitfinex wrote in its announcement.

The injunction will expire in 90 days, although NYAG’s office can petition the court to extend it 2 weeks before then.

“We will vigorously defend against any action by the New York Attorney General’s office, and we remain committed, as ever, to protecting our customers, our business, and our community against the meritless claims,” the firm added.

The NYAG office on April 24 alleged that Bitfinex lost $850 million and consequently utilized the funds from Tether to secretly cover the loss. NYAG Letitia James obtained a court order against iFinex Inc. ordering Bitfinex and Tether to cease violating New York law and New York investors. As a result, the court order required the operators to immediately stop dissipating US dollar assets backed by tether tokens while the investigation is ongoing.

A response filed by iFinex Inc. on May 5 claimed that the court order was “based on incomplete or incorrect facts and the wrong legal standard.” The company appealed that there was no fraud and no victims that the injunction is trying to protect. It also emphasized that the injunction is interrupting its business activities as it froze $2 billion worth of Tether’s reserve and prohibited them to make any investment “into the indefinite future.”