New York Extends Bitfinex Lockout Period

Justice Joel Cohen of the New York Supreme Court extended the preliminary injunction against iFinex and Bitfinex for an extra 90 days. This means the company cannot access Tether’s financial reserves for their own use. The lawsuit emerged after the New York State Attorney General accused iFinex, the parent company of Bitfinex, of cooking up a series of transactions to hide losses worth $850 million, as reported by Bloomberg, July 29, 2019.

Supreme Court Frustrates Bitfinex

Bitfinex CTO Paolo Ardoino has become quite vocal on social media and has hit out at critics of Bitfinex and Tether, writing off their criticism as pure bias.

However, Bitfinex’ reputation precedes them as the Tether fiasco has been a looming issue for over a year before the state of New York got involved.

In this ruling, the judge blocked Bitfinex from Tether’s cash reserves, which was a key reason for the LEO token offering worth a billion dollars. The injunction extends to loans and claims on Tether’s cash reserves until Attorney General Letitia James has had the chance to finish her investigation into the matter.

Cohen had been urged by Bitfinex to drop the case under the logic that New York has no jurisdiction in this matter as residents of the state are barred from their platform. Bitfinex was accused of knowingly letting customers from New York use their exchange but the company was quick to deny the claims and offer clarity on the situation.

The Bitfinex saga has been carrying on for several months now with no real end in sight.

Something isn’t Right

Despite Bitfinex submitting evidence and vehemently denying claims, something seems a tad off about how the whole situation is playing out. The shadow banking allegations were never truly addressed by the company and the NYAG looks unswayed by Bitfinex’s arguments.

This is shaping out to be a case where the public doesn’t actually know much about what is happening, or the government is looking to make an example out of a big company to set a precedent.

There is no doubt that if the company is in the wrong, then they need to be punished; but with American regulators looking to crack down on cryptocurrency, one can only hope they don’t try to make an example out of Bitfinex if they truly aren’t at fault.