Produced by Odaily
Translator | Wang Ye
Editor | Lu Xiaoming
Produced by Odaily
The NYAG (New York Attorney General's Office) is currently engaged in a legal battle with Tether and its sister company, the cryptocurrency exchange Bitfinex.
A new filing by Bitfinex and Tether general counsel Stuart Hoegner claims that a previous filing by the New York Attorney General’s office alleging that Empire State residents have been using the companies’ platforms for much longer than previously stated, “contains Numerous inaccurate and misleading assertions."
According to Hoegner, some of the documents provided by the NYAG appear to outline that Bitfinex and Tether enable New York residents to trade on Bitfinex by doing business with foreign entities that do not have a physical presence in New York, while other documents describe Bitfinex’s Clients based in New York are effectively "Foreign ECPs (Eligible Contract Participants)." Hoegner cites, for example, former Fortress partner Mike Novogratz's Galaxy Digital, which has an office in New York City.
At 6:00 UTC on July 23rd (22:00 UTC), Bitfinex and Tether submitted new legal documents in response to NYAG’s earlier allegations that “Bitfinex and Tether have been providing services to customers in the New York area.” Bitfinex and Tether Alleging that the NYAG's allegations that it served New York residents in 2018 are misleading,
A new filing by Bitfinex and Tether general counsel Stuart Hoegner claims that a previous filing by the New York Attorney General’s office alleging that Empire State residents have been using the companies’ platforms for much longer than previously stated, “contains Numerous inaccurate and misleading assertions."
According to Hoegner, some of the documents provided by the NYAG appear to outline that Bitfinex and Tether enable New York residents to trade on Bitfinex by doing business with foreign entities that do not have a physical presence in New York, while other documents describe Bitfinex’s Clients based in New York are effectively "Foreign ECPs (Eligible Contract Participants)." Hoegner cites, for example, former Fortress partner Mike Novogratz's Galaxy Digital, which has an office in New York City.
Hoegner said Bitfinex ceased serving New York residents in January 2017 and all U.S. residents in August of the same year. All U.S.-based entities and corporate clients were banned after a year, he added.
“Under Bitfinex and Tether’s terms of service, “ECPs” that transact with Bitfinex or Tether must be foreign entities. Although these foreign entities may have shareholders or personnel residing in, or otherwise in contact with, the United States or New York, Bitfinex and Tether Tether's customers are themselves foreign entities...Bitfinex and Tether do not trade with any New York ECPs," Hoegner said.
In another filing, representatives from Steptoe & Johnson LLP and Morgan, Lewis & Bockius LLP wrote:
“For purposes of personal jurisdiction, the OAG (Office of the Attorney General) cannot show that the respondent engaged in any business activity targeting New York. The OAG tries to confuse the public with isolated examples such as Bitfinex and Tether’s foreign customers having shareholders in New York or other employees. But in this case, the counterparty to the transaction with Bitfinex and Tether is actually a foreign entity.”
Moreover, the lawyers argued that even if the NYAG were successful in proving that the companies served New York residents, they would have no way of determining that investors were affected by the companies' activities.
They argue that the dozens of documents filed by the NYAG office merely demonstrate "a motley and unrelated collection of New York resident clients" without evidence that investors were actually harmed. These documents are intended to forcibly establish a connection between Bitfinex and Tether to New York residents. "OAG has not found that any New York resident customers have been misled, and no New York residents have been harmed."
The reply of Bitfinex and Tether is in response to the earlier allegations made by NYAG that "Bitfinex and Tether have been providing services to customers in the New York area".
On July 8, the NYAG submitted the latest evidence of the Bitfinex-Tether case to prove that Bitfinex and Tether have been providing services to customers in the New York area. The documents were submitted to the NYAG as evidence that it had authority to investigate the companies.
As previously reported by Coindesk, Bitfinex and Tether argued to the New York Supreme Court judge that the case “has nothing to do with New York investors” and should therefore be dismissed. However, in a series of evidence provided to the court, NYAG showed that on December 18, 2018, just half a year ago, customers in New York logged into its trading platform.
The NYAG submitted a memorandum, a confirmation letter, and 28 pieces of evidence to the New York Supreme Court. “It only takes a cursory glance at the facts gathered in the investigation to confirm that the respondents are inextricably linked to New York,” the NYAG said in the documents, which show Bitfinex and Tether’s investments from New York. According to the circumstances of the interaction between the two, the period of time was longer than the two had previously claimed.
The NYAG also showed a connection between Bitfnex and the Galaxy Digital company of hedge fund manager Michael Novogratz, which became a Bitfinex client in October 2018. And Bitfinex has accounts with two New York banks (Signature Bank and Noble Bank) and at least "another New York financial institution for transfers to customers on the Bitfinex and Tether platforms."
As Coindesk reported on July 10, the New York State Attorney General’s Office (NYAG) filed a new document showing that the company has accounts at Metropolitan Bank and Signature Bank.
The documents were submitted to the NYAG as evidence that it had authority to investigate the companies because they had New York clients. However, Tether, iFinex, the parent company of Bitfinex, and Digfinex, the majority shareholder of Tether and iFinex, have accounts at Metropolitan Bank, but the account activity is minimal.
A spokesman for the bank told CoinDesk that there was little activity on the three accounts, saying in an email that Tether Holdings LTD, iFinex Inc and Digfinex Inc have accounts at Metropolitan Commercial Bank, but the accounts were nearly as active as Neglect and require these accounts to be closed less than 5 months after they were opened.
