Bitfinex Can Hold on to Documents About Alleged $850 Million Cover-up

Bitfinex can hold on to documents pertaining to the alleged cover-up of an $850 million loss on its trading platform, the Appellate Division of the New York Supreme Court has ruled.

Ongoing case

In a Sept. 24 court order, appellate court justices David Friedman, Peter Tom, Troy Webber, Ellen Gesmer and Jeffrey Oing moved to stop a previous ruling by New York Supreme Court Judge Joel Cohen that required Bitfinex to produce documents and information related to the loss.

As Cointelegraph reported in April, the New York Attorney General’s Office (NYAG) filed a complaint against parent company iFinex, Bitfinex and affiliated stablecoin issuer Tether. It alleged that the companies defrauded New York investors by covering up an $850 million loss on the Bitfinex trading platform. Attorney General Letitia James wrote at the time:

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds.”

Cointelegraph further reported that the attorney general revealed that her office obtained a court filing which alleged that the companies were in violation of New York law and that Bitfinex had never revealed the loss to investors.

The filings claimed that Tether engaged in a series of corporate transactions in which Bitfinex got access to up to $900 million of Tether’s cash reserves and used the funds to hide losses and inability to handle clients’ withdrawals.

Bitfinex and Tether will pursue appeals

Cointelegraph reported on Aug. 20 that Bitfinex and Tether replied to Judge Joel Cohen’s ruling in the ongoing case against both companies by saying that they would appeal the decision not to throw out the case due to lack of jurisdiction.