Tether, the firm that issues the USDT stablecoin, based in Hong Kong, asked a judge of the US court to be more lenient by permitting it to utilize their cash reserves, while the NYAG or New York Attorney General lead its investigation.
NYAG seeks a 90-day injunction against IFinex
The investigation that the NYAG leads right now carefully examines the business operations of the stablecoin issuer Tether and the affiliated crypto exchange Bitfinex.
According to some new court documents filed on Monday, the attorneys for each side failed to come to a consensus on what Tether has to be permitted to do with its holdings. The office of NYAG wants to prevent any affiliated entity from touching funds in the reserve of Tether and a 90-day injunction against IFinex.
In the meantime, the attorneys that represent IFinex are seeking a 45-day injunction which includes permitting companies or also individuals affiliated with Tether, as well as Bitfinex to have the ability to redeem USDT.
This case started last month, on the 25th, when the NYAG issued a press release in which it mentioned that Letitia James Attorney General obtained a court order against IFinex. The court order has been filled to prevent both Tether and Bitfinex, and IFinex from operating in the New York State.
The OAG or Office of the Attorney General also confirmed that an investigation against IFinex regarding the alleged fraud, which was carried out by Tether and Bitfinex, was happening. James also stated that their investigation determined that the operators of the Bitfinex trading platform, who control the Tether virtual currency, engaged in a cover-up to hide the apparent loss of 850 million dollars of the co-mingled client, as well as corporate funds.
Tether to use cash reserves to maintain business operations
The New York State Supreme Court judge ordered the two of them to clarify the order last week. In one letter to the court, the attorneys of IFinex wrote that, without waving their motion from previously to vacate the Ex Parte order of NYAG entirely, they are going to agree to specific changes to the preliminary injunction.
In fact, the critical point for the cryptocurrency exchange seems to be that it wants to have the ability to utilize its stablecoin reserve funds, which include for investment purposes. The attorneys of IFinex said that if Tether simply held the proceeds in cash, the company is not going to earn the money which is needed to fund its operations.
One letter from the OAG also noted that bona fide holders of USDT have to have the ability to redeem those tokens for cash, as Tether has long represented to the market. Moreover, the proposed modifications of OAG don’t restrain Tether from placing the reserves in legitimate interest-bearing or some similar cash equivalent accounts, as the OAG understand Tether to have previously done.
Tether should not pay employees with the USDT reserves of the company
Tether also argued that NYAG has no basis for cutting off the capacity of Tether holders who are affiliated with Respondents – including the Tether employees – to redeem USDT, and as a result of that, the argument of NYAG presents a gross overreach, especially given that it isn’t a regulator.
The attorneys of NYAG say that they are not opposed to the employees of Tether being paid, but that they actually want the company to pay its employees with the use of transactions fees instead of its reserves.
Both of the parties submitted proposed modified orders that have similar third sub-paragraphs, but which clearly show the differences of opinion in the sub-paragraphs one and two.
The management of IFinex also believes that there isn’t the legitimate reason why the NYAG has to recommend or prevent Tether holders from redeeming USDT. Notably, the legal team of IFinex claimed that the statements and recommendations of NYAG are a gross overreach as the OAG isn’t a regulatory authority.