Will the case of Bitfinex worth 850 million be settled in July?

It’s been almost three months, and Bitfinex and the New York Attorney General’s Office (NYAG) are still at loggerheads.

In April, NYAG accused Bitfinex of misappropriating $850 million to make up for losses, and allegedly issued illegal securities in New York State and was an unregistered securities operator. At that time, Bitfinex quickly responded that the $850 million was not lost but was temporarily seized and protected, and that NYAG's accusation was unreasonable because the exchange did not operate in New York during the dispute, and "NYAG's court documents were written maliciously and are full of false assertions."

The two sides held their own opinions and refused to give in. The situation of the battle was once deadlocked, but the war has not stopped. In early July, the New York Attorney General's Office submitted the latest evidence in the Bitfinex and Tether case to prove that the two have been providing services to customers in the New York area. Just half a year ago (December 18, 2018), there were customers in New York logging into their trading platform, and "Bitfinex has a close connection with New York." Previously, the NYAG stated that Bitfinex had violated New York laws and deceived New York residents.

The NYAG also pointed out that the respondents repeatedly hired New York companies to assist them in achieving their business objectives, including making statements to the market about the operations of the Bitfinex trading platform and that Tether was backed by cash; the respondents opened trading accounts in at least one virtual currency trading company located in New York in 2019.

In response to this, Bitfinex made the latest response, saying that the company’s “New York customers” are actually foreign entity companies.

On July 23 (22:00 UTC), Stuart Hoegner, general counsel for Bitfinex and Tether, filed new legal documents stating that some documents provided by the NYAG appear to outline how New York residents can trade on Bitfinex, but in fact "we only do business with foreign entities that do not have a physical presence in New York."

Hoegner said Bitfinex stopped serving New York residents in January 2017 and all U.S. residents in August of the same year. He added that all physical and corporate clients in the U.S. were banned a year later.

The still pending case of "Bitfinex vs. the New York Attorney General's Office" may come to an end at the end of July. The latest documents are intended to support Bitfinex and Tether's motion to dismiss the NYAG's charges, but the hearing in this case is scheduled for July 29.

Dfund's Zhao Dong once lamented that Bitfinex has always been plagued by disasters, but it has always stood firm. However, from the hacker incident, the black swan incident of the reserve fund last year, to the accusation of misappropriation of $850 million this year, this time Bitfinex's "big test" may be coming. In addition, no matter what the result of the hearing is, it will affect the Bitcoin market.

Bitfinex in troubled times, Bitcoin caught in the crossfire

As one of the world's largest cryptocurrency exchanges, every time Bitfinex encounters a black swan event, Bitcoin almost always experiences huge fluctuations.

On April 26 this year, after the news of NYAG suing Bitfinex broke out, Bitcoin plummeted. In just 30 minutes, the price of BTC on the Coinbase exchange fell from $5,550 to a recent low of $4,950, a drop of 10%. Altcoins followed the "coin king" and plummeted, with USDT on some exchanges falling to $0.98.

Bitfinex responded quickly and spoke out many times to reassure users, "We have been informed that these crypto assets are not lost, and have in fact been seized and protected." "Allegations of a loss of $850 million are absolutely false"... But funds from the Bitfinex exchange are still fleeing frantically, and the exchange's whales are making frequent moves.

At the same time, during Bitfinex’s thrilling 48 hours, Bitcoin also experienced a thrilling 48 hours.

The upcoming hearing on July 29 may cause Bitcoin to experience abnormal fluctuations again. If the allegations that Bitfinex deceived investors and embezzled huge sums of money are proven, Bitcoin may not be able to avoid a major drop.

In addition, at the end of July, the mysteries that the market is paying close attention to, such as whether Bitfinex provides services to New York customers, whether it has colluded with Tether to embezzle huge amounts of money, and its relationship with payment processing company Crypto Capital, may be solved.

Event Development: Bitfinex 90-day ban is about to expire

When Bitfinex and the New York Attorney General’s Office were at a stalemate, the New York Supreme Court intervened in the case and published its opinion on the Bitfinex incident on May 16.

The opinion letter states that Bitfinex and Tether can continue their normal business activities, but Tether may not lend its reserves to Bitfinex or any other party other than for normal business.

New York Supreme Court Justice Joel M. Cohen stated:

“The Court finds that the preliminary injunction should be appropriate to address the legality of the New York Attorney General’s Office’s enforcement of the law, but should not unnecessarily interfere with the Respondents’ legitimate business activities.”

According to the opinion, Bitfinex’s ban will expire in 90 days. This means that Bitfinex will be unbanned in 20 days.

Source: Scallion Blockchain