US Court Orders Tether to Stop Loans to Bitfinex

New York City Supreme Court restricted Tether Ltd, from using its reserves to cover its partner’ Bitfinex $850 million losses. The order from the US court comes after the recent litigations. That involved cryptocurrency exchange and Tether Ltd, which were accused of using tether funds in an unethical way.

The article was updated on 27 November, 2019 by Amicus.

17 May, 2019 | AtoZ Markets – In April 2019, the US Department of Justice (DoJ) indicted Crypto Capital’s managers. They were Ravid Yosef and Reginald Fowler. This was for allegedly offering illicit banking services to various crypto-related firms.

Bitfinex, Tether Ltd and NYAG Never Ending Litigations

The New York Attorney General’s office (NYAG) alleged that Bitfinex had “engaged in a cover-up to hide the loss. That was about $850 million in client and corporate funds. That was about $850 million in client and corporate funds”. Bitfinex responded to NYAG allegations by saying that it did not lose the funds mentioned above. But, it “seized and safeguarded” by the governmental authorities, including the U.S.

An ongoing Bitfinex financial scandal had taken another turn. A day ago, the New York Supreme Court released an order. That restricted the crypto exchange and Tether Ltd employees from loaning Tether’s reserves to Bitfinex.  Besides, in the official document, Judge Joel M. Cohen has ordered both firms to submit documentation. That is regarding the issuance of a loan and a line of credit.

The media reports that Tether Ltd had extended a line of credit to Bitfinex. So that the exchange operator could maintain its business operations after losing $850 million, the governmental authorities n Portugal, Poland, and the US seized those funds. Tether, however, was allowed to continue to conduct normal business activities. It pays its employees for any work done that is related to the company’s day-to-day or normal business operations.

Bitfinex Responses to the US Authorities

According to the New York Supreme Court document, the order will expire in 90 days. But the authority may file a petition to extend the deadline. Court papers also state that Bitfinex and Tether’s management cannot make any changes to the loan documents. The documents which the regulator has requested.

In response to the Judge’s orders, Bitfinex stated, “The court’s decision today leaves no doubt. Both Tether and Bitfinex are entitled to run their businesses in the ordinary course.”

The exchange further noted, “We will vigorously defend against any action by the New York Attorney General’s office. And we remain committed, as ever, to protect our customers, our business, and our community against their meritless claims.”

Recently, the Bitfinex representatives announced that Bitfinex IEO raised $1 billion in just ten days during the private token sale. Will, the Supreme Court of New York, has an opinion on this Bitfinex activity, and what fate awaits the funds raised?

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