Tether and Bitfinex seek further 30 days to produce critical trial documents

iFinex — the parent company of crypto exchange Bitfinex and stablecoin issuer Tether (USDT) — has written to the New York Supreme Court requesting that its upcoming trial date be pushed back even further.

According to a filing submitted to the New York court system on Jan. 19, the legal counsel for iFinex Inc requested another 30 days to produce the documents demanded by the Office of the Attorney General (OAG).

The document production process was supposed to be completed by Jan. 15 — a date which itself was an extension on the original deadline of Dec. 16. Legal counsel for the defendant, Charles Michael, said in Tuesday’s court filing that a “substantial volume” of material had already been handed over to the OAG, but that there remained “supplemental agreed-upon items” that still had to be sourced.

The filing noted that, in addition to the time it will take to produce the documents in question, extra time will also have to be set aside for the OAG to analyze their importance. The filing states:

“The parties will need a few more weeks to produce the supplemental information, for OAG to review the production, and to discuss further among themselves what if any further proceedings may be necessary.”

The ongoing legal battle extends back to April 2019, when New York's attorney general alleged that Bitfinex had attempted to cover up the loss of $850 million of customers’ funds by taking illegal loans from Tether, with which it shares executive leadership. The defendants are also alleged to have operated an illegal securities offering.

The investigation by the attorney general had previously revealed that no more than 74% of Tether stablecoins were actually backed up by real cash reserves. This hasn’t stopped over $24 billion worth of USDT being issued to date, and the stablecoin is still involved in the largest volume of crypto market spot trading on a daily basis.

Chief technology officer of Bitfinex Paulo Ardoino recently took to his Twitter account to remind observers that Tether was registered and regulated under the Financial Crimes Enforcement Network, and that any suggestion that USDT represented a security was just an example of fear, doubt and uncertainty, or FUD.

Reminder: #Tether is registered and regulated under FinCEN as all the centralised competitors. Strict KYC/AML is applied to all Tether direct users, as the other main issuers are doing. Less regulated is just FUD. Ask yourself who benefits from spreading such misinformation? https://t.co/0izlgpJ75r

— Paolo Ardoino (@paoloardoino) December 30, 2020

Bitfinex General Counsel Stuart Hoegner told Cointelegraph that:

Every Tether token (USDt) is 100% backed by our reserves, which includes traditional currency and cash equivalents, and may include other assets and receivables from loans made by Tether to third parties.

Hoegner continued to note that: "We have met all of our obligations to the AG's office under the 354 Order in full and on time. Bitfinex and Tether have produced approximately 2.5 million pages of material. We anticipate that this will take some time for the New York AG’s office to review. Furthermore, there were supplemental information items that came out of our discussions with the AG's office over the last several weeks. We will, as before, produce those additional agreed-upon materials on time."

Given Tether’s perceived influence in driving up the price of Bitcoin (BTC), and the extent of its everyday use by cryptocurrency traders, some fear a negative outcome on behalf of iFinex may wreak havoc on the value of BTC and the rest of the cryptocurrency market.

Updated Jan. 1 at 8:48 pm UTC with a comment from Bitfinex 's general counsel.