Judge extends Bitfinex, Tether injunction
More time is needed to make a decision, and until then the goal is to keep things as they are.
The New York Attorney General's Office (OAG) is arguing that Bitfinex and Tether parent company iFinex served New York customers. But on 22 July, iFinex asserted that its customers were actually entities based outside of New York, and that OAG did not have jurisdiction over it, and that the case should therefore be dismissed entirely.
Both parties appeared in court on 29 July to present their arguments.
But a resolution will have to wait, as New York Supreme Court judge Joel Cohen said he needed more time to make a final decision, given the nature of the situation.
In order to get that extra time without rocking the boat, Cohen extended a preliminary injunction filed in May, to until a final ruling is available.
"The idea is to keep things where they are until the decision of this motion, so the decision is to extend the stay and … extend the injunction," he reportedly said.
What does it mean?
As Cohen said, the idea is to keep things where they are for now.
This means Bitfinex and Tether can continue their operations, but they are also compelled to continue participating in the OAG's ongoing investigation, and Tether is still unable to lend money to Bitfinex.
Immediately after the extension motion was passed down, iFinex lawyers reportedly tried to appeal it, but were denied.
Would a win/loss be good/bad for Bitcoin?
There's no hard answer today, but this case is going to be concluded one way or another further down the road. But while everyone can agree that this case is going to be impactful for the cryptocurrency markets, it's tougher to say what the actual impact would be.
In the short term, a victory for the OAG would likely buoy cryptocurrency prices, suggests eToro senior analyst Mati Greenspan.
"Any erosion in confidence for Tether, usually means that traders will dump their USDT and buy other cryptos," he said.
On the other hand, there's an ongoing theory that Tether has been artificially pumping Bitcoin prices by printing unbacked Tethers and then using those to buy up Bitcoin. It certainly doesn't help that one of the tidbits uncovered by the OAG in the course of this investigation was a message in which a Bitfinex executive fretted that Bitcoin would plummet if Bitfinex was unable to access its funds.
That said, one of the revelations uncovered by the OAG in its investigation was the fact that Tether is fully backed. Some of Bitfinex's funds may be temporarily indisposed, but even the evidence against Tether shows that it hasn't just been freely printing money as people feared.
From this angle, the situation might be a win-win for crypto, discounting any sentimental damage done.
Disclosure: The author holds BNB, BTC at the time of writing.
- Compound yield farmers suffer US$89 million in dodgy liquidations
- Cryptocurrency markets pull back under fear of US wallet regulation
- Bitcoin market cap hits new all time high as prices top US$18,000
- Axie Infinity integrates Chainlink oracles for prices and VRF
- Cryptocurrency security: End to end guide on keeping your crypto safe