NYAG insists Bitfinex, Tether should still produce required documents

The New York Office of the Attorney General (NYAG) has submitted a letter to Supreme Court Judge Joel Cohen, arguing that cryptocurrency exchange Bitfinex and Tether should not be granted a continuing stay of demands.

Earlier this week, legal representatives of Bitfinex and Tether claimed that the companies have spent more than $500,000 and tasked 60 lawyers to look for the documents that NYAG was asking for. Part of the expense is the respondents’ use of 10 different communication systems.

The defendant’s lawyers said that complying the entire requirements is difficult, costly, and unfair considering the resources they have already spent on the investigation.

“A stay will serve the public interest, including by conserving judicial resources. And it will serve the interests of justice, as basic fairness dictates that the Respondents, who have been hauled into this forum against their will and have already incurred extraordinary expense to comply with portions of this § 354 Order to date, should not be made to suffer irreparable harm from being required to comply with that Order while seeking relief therefrom,” they wrote.

But NYAG’s letter to the judge on Thursday insisted that “Whatever difficulty Respondents may claim in collecting and reviewing the communications called for in the 354 Order, the Court should take note that the 354 Order also calls for information that any responsible trading platform or venue of exchange should have at its fingertips.”

In particular, the NYAG wants the companies to submit Tether’s issuance and redemptions; its existing corporate, trading, and client accounts; tax filings; and customer data for those who wanted to withdraw cash from Bitfinex.

“The 354 Order also directs production of documentation of the so-called ‘line of credit’ transaction, all of which was ostensibly generated while Respondents were under subpoena by the OAG, and therefore should be preserved and in reasonable order. There is nothing difficult, or costly, about producing that information,” the letter stated.

The filing last Thursday asked the New York judge to dismiss a stay of proceedings requested by the two companies. The NYAG counsel argued that Bitfinex and Tether still need to turn over documents even if an order filed under section 354 of the Martin Act was stayed by the court permanently.

The letter was written by John D. Castiglione, Johanna Skrzypczyk, and Brian Whitehurst.

It can be recalled that Bitfinex and Tether were granted a stay of document demands by the court last May. This means the court only requires both parties to supply documents and information related to whether there is personal jurisdiction over the companies in New York while staying the document order in all other regards.

This legal saga started when the NYAG alleged that Bitfinex lost $850 million and consequently utilized the funds from Tether to cover the loss.