- It has been revealed in court documents that Tether had invested a part of their reserves in bitcoin
- Both Bitfinex and Tether are seeking to have their case dismissed
The saga of Bitfinex and Tether doesn’t seem to be ending anytime soon. A few weeks ago, startling revelations came out following an investigation by the New York attorney general’s office. The first was that the two companies had colluded to cover up hundreds of millions of dollars in losses by giving Bitfinex access to Tether’s reserves. The second was that Tether, contrary to previous claims, did not backup 100 percent of their tokens with US dollars but only about 74 percent.
Interestingly enough, this has not been the end of the revelations and according to a May 21, 2019 report, Tether admitted that the had invested some of their reserves in bitcoin.
Tether Buys Bitcoin
In the documents dated May 16, 2019, David Miller, who is an attorney for Bitfinex, stated that Tether invested a small amount of their reserves in to bitcoin and stated that this took place prior to April 24, 2019, court order and that they also invested in instruments beyond cash and cash equivalents which included bitcoin as well as purchasing several other assets.
However, not everyone was impressed with the move as the New York supreme court judge Joel Cohen stated that it did not make sense for a stablecoin to invest in bitcoin, considering their market volatility.
“Tether sounded to me as sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate, that seems like it’s playing into what they are saying,” he said.
Following these revelations, Bitfinex and Tether have now made moves to get to the ongoing case within York attorney general’s office dismissed.
According to documents dated May 21, 2019, the law firms representing the two companies have argued that the New York Supreme Court does not have proper jurisdiction for the case. It was further stated that the New York Supreme Court does not have personal or subject matter jurisdiction and cannot be appealed to. This is stemming from the fact that Bitfinex and Tether do not operate in the state of New York and investors In question were not in the state
Even though the case was opened as a means to protect investors within the state, Bitfinex and Tether argue that this does not apply to them and they were unfairly targeted.