Bitfinex and Tether Lawyers Say Court Lacks Jurisdiction over Case, Move To Dismiss
Counsel for crypto exchange Bitfinex and USDT issuer Tether has moved to dismiss the two companies’ case versus the New York Attorney General (NYAG), court filings show.
According to the law firms that represent Bitfinex and Tether, the case should be dismissed. They argue that the New York Supreme Court (NYSC), which is handling the case, has no jurisdiction over the matter at hand.
The lawyers claim that the court does not have any jurisdiction whatsoever- “personal nor subject matter“- over the allegations brought before it by the New York Attorney General’s office.
In their filing, they argue that the NYAG cannot appeal to the NYSC, as both Bitfinex and Tether do not run operations in New York and neither have they in any way harmed New York-based investors.
The motion thus states that the NYAG initiated the “special proceedings” with the intention of protecting investors in the state of New York. However:
“[NYAG] chose to target two virtual currency businesses that have nothing to do with New York investors…”
And added that Bitfinex and Tether businesses currently do not offer their services to New Yorkers and that they neither advertise nor allow the state’s residents to use their platforms.
Lawyers for the two companies also maintain that the Martin Act as constituted is inapplicable to the tether (USDT) stablecoin. The Martin Act is an anti-fraud legislation that also governs securities and commodities.
New York Attorney General Letitia James initiated proceedings against Bitfinex and Tether in a court filing made in April. The NYAG accused the two firms of having defrauded New York investors in a cover-up that involved an $850 million loss suffered by Bitfinex.
James explained that the move to file a case against the two firms stemmed from the fact that New York state authorities want to see virtual currency businesses offer their services in accordance with the law.
She added that they would “continue to stand-up for investors,” and that includes seeking justice in cases where the investors are either misled or defrauded.
Meanwhile, the case has seen a new angle develop after a Bitfinex attorney stated that Tether invested part of its fiat reserves in bitcoin (BTC).
But that apparently drew the attention of NYSC Judge Joel M. Cohen, who wondered how Tether has assets “in a volatile currency” that it was supposed to “somehow modulate.”
Away from the courts, Bitfinex has entered into the world of initial exchange offering (IEO) by launching Tokinex, a platform that will see the first token issue this week.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.