Bitfinex Challenges NYAG Claims of Servicing US Customers

Bitcoin exchange platform Bitfinex has issued a court filing refuting claims by the New York Attorney General (NYAG) of servicing US customers in 2018.

Bitfinex Says Alleged US Customers are Foreign Entities

Earlier in July, the NYAG submitted evidence alleging that Bitfinex provided services to customers based in New York till December 2018, in violation of state law.

In response, Monday’s (July 22, 2019) court filing sees Bitfinex accusing the NYAG of misrepresenting the alleged connections to US customers.

Bitfinex & Tether fire back, responding to the NY AG's attempts to 'throw everything at the wall' (@bitcoinlawyer's words)https://t.co/fBejvmcig6

— Alistair Milne (@alistairmilne) July 22, 2019

According to the filing, Stuart Hoegner, general counsel for Tether, revealed that the customers in question were foreign eligible contract participants (ECPs).

An excerpt from the filing reads:

OAG (Office of the Attorney General) tries to confuse matters by referring to isolated instances where Respondents’ foreign customers have shareholders or other personnel in New York. But in those circumstances, Respondents’ counterparties — the ones with which Respondents actually transacted business — are the foreign entities.

Hoegner also argued that the NYAG is attempting to pierce the corporate veil so as to present the ECPs as resident bitcoin traders in the U.S.

As reported by Bitcoinist, the NYAG is accusing Bitfinex of covering about $850 million in customer losses.

No Jurisdictional Leg to Stand On

Bitfinex is also challenging the broader jurisdictional authority of the NYAG in the case beyond the matter of servicing U.S. customers. The company’s lawyers say the court lacks both personal and subject matter jurisdiction over the case.

On the latter jurisdictional leg, Bitfinex has issued another filing claiming that Tether (USDT) doesn’t qualify as a security or commodity. Thus, it cannot be included in financial fraud litigation under the Martin Act.

3 key points on @bitcoinlawyer (@bitfinex counsel) motion to dismiss NYOAG case:+ Customers in question were foreign ECPs+ Court lacks personal jurisdiction over Bitfinex and @Tether_to + Court lacks subject matter jurisdiction under Martin ActSource: https://t.co/uYKQdyYOAd pic.twitter.com/dFDNvwG8Te

— Gabor Gurbacs (@gaborgurbacs) July 22, 2019

As such, Bitfinex says the NYAG is attempting to have it both ways — requesting substantive relief while failing to justify the jurisdictional basis for obtaining such relief. The following excerpt from the filing summarizes Bitfinex’s position:

OAG wants judicial relief today in the form of discovery and injunction, but cannot be bothered to show that there is a statutory basis for that relief. The Court should reject OAG’s flawed arguments.

These new court filings are part of the company’s efforts to have the NYAG’s suit against it thrown out. Back in May, Bitfinex secured a temporary stay of documents in its legal tussle with the NYAG.

Hearing on the matter will resume on the matter at the end of July.

Will Bitfinex be able to get the Court to dismiss the case? Let us know in the comments below.

Images via Twitter @alistairmilne and @gaborgrubacs. Shutterstock