iFinex Wins Document Handover Appeal Against NYAG

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iFinex, the parent company of exchange Bitfinex, will not have to turn over documents to the office of the New York Attorney General (NYAG) relating to an alleged cover-up of an $850 million loss, the Appellate Division of the New York Supreme Court has ruled. The ruling, handed down Tuesday, overturns the original ruling made by New York Supreme Court Judge Joel Cohen in August that found in the NYAG’s favor, and means that iFinex will avoid public scrutiny of the famously murky link between Bitfinex and Tether.

iFinex Off the Hook…for Now

iFinex has been accused of covering up an $850 million loss on the Bitfinex exchange through funds backing the Tether (USDT) stablecoin, which the NYAG says amounts to a violation of the Martin Act. iFinex has argued that this law only applies to commodities and securities, of which USDT tokens are neither, and that the NYAG doesn’t have jurisdiction over the exchange. The ruling means that iFinex and Bitfinex will not have to provide documents about their relationship with each other and Tether to investigators until a decision on an appeal to dismiss the entire case has been reached, meaning it is only a partial victory for the exchange. A spokesman for the NYAG told Forbes that the reversal wasn’t the end of this particular issue and that the department would fight the ruling:

The injunction that prohibits the movement of money between Tether and Bitfinex is still in place. We look forward to making our case in court as we seek to have Judge Cohen’s decision upheld and continue our investigation.

Decision in 2020 Looking Likely

This back and forth of motions, judgements, appeals, and sub-motions will only proceed to drag the case well into 2020. Tuesday’s motion was granted on the condition that additional documents pertaining to the broader appeal for dismissal are filed by November 4, 2019. If iFinex’s motion for dismissal is unsuccessful, actual arguments won’t likely begin until next year when the case proper can begin.