New York’s investigation of cryptocurrency Tether and its parent company has suffered a further delay, leaving investors uncertain about the outlook for one of the industry’s most watched cases.
iFinex, which owns both Tether and the Bitfinex trading platform, has agreed with the New York attorney general to postpone the production of documents that will inform the course of the investigation, according to a case filed in a New York court Tuesday. .
The documents were originally due on Jan.15, but the deadline has now been delayed by 30 days, the document says.
Tether, a so-called stable coin, is pegged to the price of the dollar and is designed to facilitate trading with other digital tokens, due to its stable price and connection to the traditional currency market. It has become one of the most successful digital currencies alongside bitcoin, making the survey important for the entire digital asset market.
Tether represents 80% of the stable coin market and recently generated higher revenue than bitcoin, Philippe Bekhazi, chief executive of crypto market maker XBTO, told Crypto Finance Conference on Wednesday.
The New York Attorney General presented the findings of his Tether investigation in a court application in April 2019. The record showed that Tether was claiming on its website until February 2019 that every unit of digital currency was “still backed 1” for 1. by the traditional currency held in our reserves ”.
Tether and Bitfinex have been through turbulent times for years, forging relationships with banks that generally shy away from trading with unregulated cryptocurrency exchanges, the NY AG said. In 2018, Bitfinex ended up placing more than $ 1 billion in “customer and business funds” with an entity believed to be based in Panama without “any similar written contracts or agreements” between the two groups, according to the report. petition. .
Bitfinex had to face “extreme difficulty in honoring requests from its clients to withdraw their money from the trading platform” by mid-2018 because the Panamanian bank “held all or almost all of the funds of Bitfinex ”, according to the file. The group “refused to process customer withdrawal requests and refused or was unable to return funds to Bitfinex,” he said.
By the time the petition was filed in court, Bitfinex had lost access to the $ 851 million held in the Panamanian entity, and then was hiding those developments from its customers, NY AG said.
“Our investigation determined that the operators of the Bitfinex trading platform, who also control the virtual currency Tether, have engaged in a cover-up to hide the apparent loss of $ 850 million in funds from both customers and businesses. Said NY AG Letitia James.
The investigation is now at a key stage, as the documents to be produced are expected to determine whether the GA’s office will take legal action against the company. This is the second delay from the deadline set by the court for the production of documents at a virtual hearing in September.
The attorney general’s office declined to comment. Bitfinex has denied the wrongdoing, saying the allegations by the attorney general’s office “were written in bad faith and were riddled with false claims.”
Bitfinex general counsel Stuart Hoegner told the Financial Times on Wednesday that Bitfinex and Tether have fulfilled all of their obligations under NY AG’s request, producing 2.5 million pages of documents so far.
Tuesday’s court record said the companies had “largely completed production of documents and produced a substantial volume of documents for the attorney general’s office,” but there are a few “additional items agreed upon that need to be completed.” ”
Regulators are already revolving around cryptocurrencies, calling for stricter rules to govern trading in these assets.
Stable coins will likely be one of the first ports of call for watchdogs in the digital asset industry, said Sassan Danesh, managing partner at crypto and currency firm Etrading Software, due to their popularity. with institutional investors.