After Bitfinex and Tether were targeted by NYAG, they hired the most expensive lawyer while issuing additional USDT
Editor's Note: This article comes from31QU（ID：blockchain31）, Author: Ganoderma lucidum, reproduced by Odaily with authorization.
Editor's Note: This article comes from
, Author: Ganoderma lucidum, reproduced by Odaily with authorization.
On the evening of July 29th, the latest hearing on the New York Attorney General’s Office (NYAG) and iFinex (Bitfinex’s parent company) ended. To our great disappointment, this hearing did not achieve significant results. In the end, the judge did not rule on the case, but postponed the trial time to 90 days later.
Fortunately, at least one issue was confirmed in this hearing: Bitfinex admitted that the platform does have American users, but also said that it was the ban that made "American users unacceptable", and the platform itself has made decisions to reject these users. "It will be extremely difficult to drive New York users off the platform," the statute states.
As the currency with the largest market share of stablecoins, every move of Tether, the issuer of USDT, affects market sentiment. In fact, during the months when Tether and its affiliated company Bitfinex fell into the judicial vortex, the former did not slow down the pace of expansion, and the latter also filled the huge shortfall by issuing coins.
Text / 31QU Ganoderma lucidum
And in this stablecoin competition deeply participated by Tether, unexpected changes and changes have quietly occurred.
Text / 31QU Ganoderma lucidumAt 9:30 p.m. on July 29th, Beijing time, a new hearing was held as scheduled. According to the prediction of the presiding judge Hon. Joel M. Cohen, he hopes to resolve this cryptocurrency case that has lasted for more than three months today.It is understood that in this hearing, the two parties mainly engaged in debates on the scope of Bitfinex service users, jurisdiction and other issues. Judging from the real-time feedback information from the audience, it may be possible to feel the tense atmosphere and the intensity of the confrontation at the hearing.
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▲ The live audience live-streamed the hearing on TwitterOne of the controversial points is whether Bitfinex provides trading services to US residents in violation of regulations.Bitfinex stated that it does not provide cryptocurrency services to US customers: "The terms of service exclude US customers and clearly state that New York customers are not welcome... Last week, after confirming that a customer is a New York resident, we rejected him. outside the door."In addition to serving users in the United States, the NYAG expressed concern about "Bitfinex and Tether executives conducting cryptocurrency transactions in New York." According to its previous filings, there are currently Tether executives living, doing business and opening accounts in New York.In this regard, iFinex defended that it had expressed its attitude in the documents submitted on July 22. The NYAG’s allegations were “misleading” and Bitfinex served foreign entities instead of New York customers. According to previous documents, in fact “we only conduct business with a foreign entity that does not have a physical presence in New York".In addition, the two parties also discussed what category of USDT issued by Tether belongs to and whether the NYAG has jurisdiction.For this hearing, judge Hon. Joel M. Cohen obviously underestimated the complexity of the case. Regarding several core issues, the two sides insisted on their own opinions and were at loggerheads. After nearly two hours of verbal confrontation, the judge expressed helplessly Need more time to think, extend the trial time of the case to 90 days, and make a decision after both parties submit more sufficient evidence and testimony.In addition, the judge also announced that the NYAG could still continue to investigate the case, and Bitfinex’s lawyers tried to overturn the resolution, which was ultimately rejected.
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The tug-of-war: tightly around 3 issuesIn April of this year, a document released by the New York State Attorney General's Office (NYAG) took the lead in kicking off the prelude to the battle. , filling a huge funding gap and saying Bitfinex was operating in the state without a license.Immediately, Bitfinex issued an announcement to clarify that the $850 million in funds was not lost, but was "seized and protected." In addition, it also stated that the New York Attorney General's Office's behavior was "seriously overreached and full of malicious intent."It is worth noting that although this huge sum of money served as the fuse for the protracted war between the two sides, the court quickly banned Tether from lending any reserve assets to Bitfinex or other entities, but in early May this year, the Bitfinex team issued a platform currency In the way of LEO, after raising 1 billion US dollars to fill the "hole", the issue of misappropriation of funds has come to an end for the time being.By sorting out the fighting process between NYAG, Tether and Bitfinex, it can be clearly found that since May, the focus of the fierce battle between the two sides has shifted from whether Bitfinex illegally embezzled reserves to whether Bitfinex is still serving American users and whether executives are U.S. activities, and issues of jurisdiction.According to Bitfinex's previous self-report, Bitfinex had stopped serving New York residents as early as January 2017, and stopped serving all US residents in August of the same year, and in the following year, all entities and corporate customers in the US , have also been banned from accessing.However, this justification was “faced” by the fact that, according to documents submitted by the NYAG, until the beginning of this year, users with IP addresses located in New York were still allowed to access the exchange. In addition, according to the media The Block, a user also successfully accessed Bitfinex from New York State after creating an account named "ImaNYresident", and as long as the user made a misleading statement during the login process, he claimed to be a non-US resident , the transaction can still continue.
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Afterwards, the user deliberately left a message saying, "I am a New York resident" when withdrawing assets, but in the end the withdrawal was successful. These series of signs all show that even though Bitfinex claims to have suspended services for US users, in fact, the platform does not have a complete mechanism to curb similar behaviors. In other words, the platform is still taking advantage of regulatory "loopholes".In response, Bitfinex responded that the account had been blocked, "This kind of 'gotcha' sting also speaks volumes about his and our other detractors' true motivations).”
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▲ Bitfinex responded that it regretted that the user deceived rather than helping the platform improveIn addition to questioning that Bitfinex is still providing services to American users, NYAG also has evidence that Bitfinex partners and executives are involved in cryptocurrency trading activities in the United States: Bitfinex authorized a New York trading company to conduct business in the United States and opened a corresponding company account.In fact, the judicial controversy caused by Bitfinex’s misappropriation of Tether’s huge reserve funds has been fermented so far. It has shifted from the original funding issue to the issue of whether the cryptocurrency exchange operates in compliance with US regulatory policies.The background of this case is the recent stricter policy on cryptocurrency trading business in the United States. According to incomplete statistics, since May this year, Binance, Bittrex, Poloniex and other exchanges have announced the suspension of services for US users.
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'There will be no results in the short term'For this hearing, many people think that there is a lot of thunder and little rain.Before the hearing started, the price of USDT fluctuated because some investors were worried that the judge might sentence USDT to a "death sentence" during the hearing, so they left the market early, but the final result was unexpected. Look, during the hearing, neither Bitcoin nor USDT saw significant price fluctuations. Such concerns have been eased by the 90-day delay in the trial.Interestingly, Giancarlo, CFO of Bitfinex, accurately predicted that the judicial battle would not come to an end for the time being.Before the hearing started, he expressed his opinion, saying, "It is more likely that this investigation will continue for three to five months." He also added, "The U.S. government is only targeting us because our business is too big. They Want to get a share of it, but they can’t do anything with us”, “We have not had a single US user in our business in the last 2 years, and we have never established any corporate entities in the US, so their judges can’t make any judgments, of course this investigation It might go on for another three or five months. But luckily, we make enough money that we can afford the best lawyers."Regarding this judicial dispute, Deng Jianpeng, a professor at the School of Law of the Central University of Finance and Economics, also expressed his opinion: "The trading volume of the stable currency TEDA can reach 28 billion U.S. dollars a day. This black-box operating company is currently the biggest potential risk in the cryptocurrency market! The US only A small number of people use Tether to trade virtual currency. The New York State Attorney General sued Tether in the name of protecting consumer rights. Chinese citizens are a huge group of Tether users, but there is no regulatory agency to protect the rights and interests of their own citizens. What. Turning a blind eye doesn’t mean it doesn’t exist.”Some analysts believe that since there is still a 90-day buffer period, the prosecution will strengthen the investigation. For Tether, it is urgent to find favorable arguments for the jurisdiction and the qualitative nature of USDT. At the same time, it is urgent to strengthen the audit of USDT and improve its transparency. .OKEx CEO Jay Hao acknowledged that the lawsuit will not end in the short term. Today, he posted on Weibo that due to the complexity of the US judicial system and the pursuit of procedural justice, it will not be easy to judge legal or illegal for a new thing like USDT. USDT's lawyers also have various means to delay the progress of the case. How to characterize USDT alone will require a long court debate. The USDT case will not have any results in the short term. The advantage of a legal society is that everything can be handled in accordance with the law. For cases with vague laws, open and transparent hearings and trials are required.But in any case, regulation is still the sword of Damocles hanging over Bitfinex and Tether for some time to come.
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The former successfully completed the raising of 1 billion US dollars in just 10 days through the issuance of platform currency and private placement financing in May, which solved the urgent need; big mouth".It can be seen from the figure below that since the beginning of April this year, Tether’s issuance on Ethereum has seen a significant increase. Even after the black swan event occurred on the 26th of that month, the pace of expansion has not stopped.
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▲ The trend chart of the total circulation of each stablecoin in the first half of 2019
By sorting out the situation of Tether’s additional issuance, it can be found that this company has maintained a record of hundreds of millions of additional issuances almost every month. In April alone, Tether has carried out multiple additional issuances on the three major public chains of Omni, Ethereum, and TRON. The number exceeds 600 million; and this month, Tether has also carried out multiple additional issuances based on the Ethereum network, with a number of nearly 400 million.
According to 31QU statistics, after Omni, Ethereum and TRON, USDT has now integrated the development of USDT's blockchain network to EOS (June), Algorand (July) and Liquid Network (July).According to DApptotal statistics, the current total market share of USDT has exceeded 80%, far ahead of other emerging stablecoins. That is to say, even though it encountered a crisis in April and was eroded by other stablecoins after part of the market was eaten away, Tether quickly regained its status as the overlord of stablecoins by virtue of its frequent additional issuance and crazy layout.
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▲ The daily trading volume of GUSD has shrunk to about 3 million US dollars
In this battle for stablecoin market share, unlike USDT, the stablecoin GUSD, which once relied on compliance, has been declining in market value since May and seems to have taken the lead in retreating.
