Bitfinex claims NYAG case should be dismissed, outside of NY jurisdiction

21 May, 2019
by David Borman
Bitfinex claims NYAG case should be dismissed, outside of NY jurisdiction

As most know by now, Bitfinex and Tether are being investigated by the New York Attorney General (NYAG) over the alleged cover-up of an $850 million loss by the company. Now, the two entities are pushing back, and it has been reported that they are asking for a full dismissal of the investigation, citing the fact they have no customers in New York or the US, and so are outside of the NYAG's jurisdiction.

Lawyers for the companies recently submitted new filings to Judge Joel M. Cohen of the New York Supreme Court, making a case for a full dismissal on a few different grounds, but a large one was the fact that since the company has no customers in New York or the US, then there is no reason for it to be subject to that nations' laws.

From the filing:

"Bitfinex and Tether are foreign corporations that have no offices or other presence in New York, no customers here, and conduct no business in the state. There is accordingly no basis for 'general' personal jurisdiction over them under CPLR 301. Nor is there a basis for 'specific' personal jurisdiction under CPLR 302. The key factor under CPLR 302 is 'purposeful availment': if a company directs its conduct to a particular state, it can expect to be dragged to court there for matters relating to that conduct. What Tether and Bitfinex have done here is the opposite. They have steered clear of New York (and of the United States), and so cannot fairly be expected to defend legal proceedings here."

Another reason to dismiss the case, according to the legal representatives of Bitfinex and Tether, involve the fact that the laws being applied here are for commodities and securities, which this filing claims, "tethers are neither."

The filing asks for at least a temporary stay on the Gen. Bus. L. § 354 Order, which is demanding documentation, while reviewing the call for dismissal. It is mentioned that they are asking for some urgency on this, as the order is demanding the documentation in about 2 days.

It is unclear how the court will respond to this request, though the arguments do sound somewhat reasonable. Will the Bitfinex issue be dropped, and if so, should investors still be concerned? Stick with Chepicap for all updates!

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