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Bitfinex faces NY lawsuit over $800M in lost funds

The infamous crypto exchange must now answer calls for clarification regarding the location of $800 million in funds

Bitfinex, a cryptocurrency exchange, is to stand trial in a New York court alongside a group of companies. The firms will face allegations made by State Attorney, Letitia James, that they lost over $800 million in funds that they tried to conceal.

The companies grouped with Bitfinex are involved in running Tether (USDT). Tether functions as a conduit for trading for many crypto enthusiasts around the world; it’s pegged to the US dollar, so is a way to store crypto profits in ‘dollars’ without incurring tax liabilities.

Bitfinex responded to the allegations by arguing that the money was deposited into a banking firm located in Panama called the Crypto Capital Corp. However, it was then seized by government authorities from different countries.

Bitfinex and co claim they were targeted by these seizures and that they are working on recovering the lost funds. In addition, they also deny allegations that they were trying to hide the fact that the money was lost.

Furthermore, Bitfinex and the group of companies made an effort to have the case removed, arguing that New York did not have the jurisdiction to preside over the case, as the firms involved are not based in the state. As a result, they posited that they have no obligation to answer to state authorities.

However, the New York court denied their motion and stated that traders based in New York had used Tether. In addition, some of the Bitfinex staff worked in the state, which, the court argued, places the company under New York’s jurisdiction.

Beyond these arguments, Bitfinex also stated that since Tether is not a security, the court does not have jurisdiction. Despite this, the court stamped its authority on the case and rejected this particular argument by pointing out that the Martin Act does label Tether as a security.

In a statement, the state attorney stood by the court’s decision to pursue the appeal and said that this investigation was in the interest of investors.

“Today’s decision validates our office’s ability to use its broad and comprehensive investigative powers to protect New Yorkers. Not even virtual currencies are above the law. We are pleased with the court’s decision, and will continue to protect the interest of investors in the marketplace.” his statement reads.

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