Tether isn’t taking yesterday’s New York State Supreme Court ruling lying down.
In a statement issued today, the stablecoin issuer responded to Justice Joel M. Cohen’s order directing the New York Attorney General (NYAG) to continue with its case against iFinex.
"We appreciate Justice Cohen’s consideration of our motion in late July and his order released yesterday. While we are disappointed in the decision on our motion to dismiss, we will continue to vigorously defend against any action by the New York Attorney General’s office," Tether said. "We look forward to the opportunity to pursue these issues further in the appellate court.”
Meanwhile, iFinex, the parent company of cryptocurrency exchange Bitfinex and stablecoin issuer Tether, has filed notice with the court that it plans to appeal the decision to dismiss its motion to terminate the case due to a lack of jurisdiction by the NYAG.
If the appeal fails, iFinex will not be able to avoid complying with the NYAG's order to turn over documents relating to their investigation.
NYAG to continue with Martin Act action
NYAG Letitia James sued iFinex in April 2019 for a deal allowing Bitfinex to access a $900 million line of credit from Tether. The action orders iFinex to turn over documents describing the relationship between Bitfinex and Tether and the deal.
iFinex is being pursued by the NYAG in accordance with the Martin Act, which directs regulators to investigate potential securities fraud.
According to the NYAG's initial press release, Bitfinex deposited $850 million of corporate and client funds in a Panamanian payment processor called Crypto Capital with no contract or written assurances regarding the deposit. When the funds went missing, Bitfinex took a $900 million line of credit from Tether's cash reserves, $700 million of which has already been used.
iFinex has countered by filing a motion to dismiss the suit on the grounds that the NYAG lacks the jurisdiction to conduct their investigation. The company contends that the NYAG investigation lies outside of their jurisdiction because Bitfinex does not operate in New York and the Tether stablecoin does not represent a security.
A letter submitted by iFinex in July explains that the company has already invested over $500,000 and put 60 lawyers to work in order to comply with the request.
Tether, for its part, continues to profess its innocence:
"Any assertion that we have misled our customers about Tether (USDt), its backing, or about the negotiated transaction between Bitfinex and Tether is false," the company’s statement today read. "We remain committed, as ever, to protecting our customers, our business, and our community against the Attorney General’s meritless claims."
Tether has long been the root of controversy over whether or not its Tether stablecoins are backed 1:1 with U.S. dollars as the company insists. Unless the appeal is successful, the NYAG may finally lay that question to rest.