New York Supreme Court orders Tether to freeze transfers to Bitfinex

The ongoing Bitfinex and Tether scandal has taken another turn following instructions from New York’s Supreme Court judge Joel Cohen, who has ordered Tether to freeze transfers to the Bitfinex exchange.

In an official court document published on Thursday, Cohen ordered Bitfinex and Tether employees to stop loaning Tether’s reserves to Bitfinex.

“The Court finds that the preliminary injunction should be tailored to address the Office of the Attorney General’s legitimate law enforcement concerns while not unnecessarily interfering with the Respondents’ legitimate business activities,” he wrote.

Cohen also wrote that Tether “cannot distribute any funds” to anyone who isn’t on the company’s payroll or anyone who isn’t currently doing consulting work.

On April 26, it was reported that the New York Attorney General’s office (NYAG) alleged that Bitfinex had “engaged in a cover-up to hide the loss of $850 million in client and corporate funds”.

Despite the news causing the cryptocurrency market to temporarily crash, it soon recovered and rallied more than 40%.

Bitfinex even raised around $1 billion in a private token sale for exchange token LEO, which according to the exchange’s CTO was raised within 10 days.

Cohen also noted that “neither Bitfinex nor Tether are allowed to modify in any way documents asked for in the NYAG’s original subpoenas”, and that the “injunction will expire in 90 days, but the NYAG’s office can petition the court to extend it two weeks before then”.

Bitfinex responded to Cohen’s statement by claiming that it was a “victory in the ongoing defence of our business against the NYAG’s office”.

The statement continued: “We are grateful that Judge Cohen recognised, in argument before his court, that the original injunction obtained by the New York Attorney General was ‘both amorphous and endless’ and that it needed to be ‘as narrow as possible’. We believe that the court’s decision today leaves no doubt that both Tether and Bitfinex are entitled to run their businesses in the ordinary course, even during the short period when this now narrowed preliminary injunction is in place.”

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