Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
The letter comes after a judge had noted that the scope of the OAG court order was too broad.
Lawyers for parent firm iFinex Inc., Bitfinex, USD stablecoin issuer Tether and affiliated entities have submitted a letter to Justice Joel M. Cohen on May 13 asking for more leniency in the use of cash restrictions imposed by last monthâs injunction.
On April 24, the office of the Office of the New York Attorney General (NY OAG) had accused Bitfinex of losing $850 million of funds needed for user redemptions, and subsequently using capital from affiliated firm Tether to secretly cover the shortfall.
Last week, Cohen had noted that the scope of the OAG court order was too broad, and ordered the parties to try to resolve their dispute and submit a refined argument.
The May 13 letter from iFinex claims that the NY OAG was grossly overreaching its purview with some of the stipulations and language used in the court filings, stating that the respondentsâ lawyers do not waive their Motion to Vacate the ex parte April 24, 2019 Order in its entirety. It noted that in discussions thus far, parties on both sides have been unable to reach agreement, and critiqued the NY OAGâs recent counterproposal.
At the heart of the respondentsâ contention was the NY OAGâs restriction on the use of stablecoin reserve funds â whether for investment purposes, related-party transactions or distributions and dividends. The letter argued against the injunction to use ânon-reserve fundsâ only to make payments, stating:
âOAGâs language would potentially require the company to cut off salary and other ordinary course payments in any given period if, for whatever reason, there was insufficient profit [âŠ] It is simply not the OAGâs purview to micromanage Tetherâs business in this way.â
Elsewhere, the letter argued that Order could be misconstrued to suggest that Tether âmay only invest in cash or cash-equivalent accounts,â noting that:
âTetherâs business model depends on making investments and asset purchases with the proceeds it derives from selling tethers. If it simply held the proceeds in cash, the company would not earn the money required to fund its operations.â
While upholding that Tether should use funds from transaction fees, rather than reserves, for payments, the NY OAG did clarify in March â before the injunction â in a letter to the court that âbona fide holders of tether should be able to redeem those tokens for cash, as Tether has long represented to the market.â
It also stated that âthe OAGâs proposed modifications do not restrain Tether from placing the reserves in legitimate interest-bearing or similar cash equivalent accountsâ
As reported, court filings signed by AG Letitia James alleged that the âco-mingled client and corporate fundsâ ostensibly lost had been held at the controversial Panama-based shadow payment processor Crypto Capital.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.