In the world of Tether and Bitfinex, nothing is ever easy. Accused of fraud, the two companies have turned to the New York County Supreme Court for help.
Back in April, the New York Office of the Attorney General (NYOAG) accused Tether and Bitfinex of serious wrongdoing. The authority suspects that Bitfinex used $850 million of USDT’s funds to cover up its significant losses.
As a result, the NYOAG issued a restriction that obstructs the usage of USDT’s funds for the period of at least 90 days. The rationale is clear-cut: if Bitfinex continues to utilize the funds, they might disappear for eternity.
Attorneys of iFinex, the parent organization of Bitfinex, maintain a different view. They point out that the NYOAG lacks legal basis and authority to scrutinize its business. This belief has prompted them to write a letter to the New York County Supreme Court. In it, the authors state that the two parties failed to decide if and how Tether can access its funds. Also, they pointed out that the investigation might seriously affect USDT’s operations and financial robustness.
“While Tether does not anticipate that it will suddenly become unprofitable, OAG’s 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,” the document reads.
The attorneys suggest a way out: to reduce the injunction to 45 days. Besides, they asked the court to grant affiliated entities the right to redeem their tokens within this period.
Over the past few years, Tether has been accused of a wide variety of wrongdoings. Already last June researchers at the University of Texas at Austin claimed that USDT is engaging in illicit activity with Bitfinex.
More recently, Altcoin Buzz reported that some observers pointed out that Tether had changed the coin’s description, stating that there are other assets backing it. These include currency and cash equivalents and “from time to time other assets.”
After that, the New York Attorney General revealed that USDT is only 74% backed by USD. Eventually, CoinFlip, a crypto ATM startup, postponed its support for USDT because of the NYOAG’s investigation.