The state’s Judge at the Supreme Court, Joel Cohen, reverberated comments from an initial hearing which was held in New York City last week. Tether and Bitfinix employees and execs were ordered to put a stop to loans from Tether’s reserves to the crypto exchange, as well as outlining other stipulations in the NYAG’s (The New York Attorney General) ongoing investigation.
He wrote, "The Court finds that the preliminary injunction should be tailored to address OAG's legitimate law enforcement concerns while not unnecessarily interfering with Respondents' legitimate business activities."
The Judge specifically ordered:
- No loans should be granted from Tether to Bitfinex or anyone else, except in conducting business in the usual way.
- Tether only has permission to distribute reserve funds through payroll and usual contractor, vendor, or consultant payments.
- Neither Tether nor Bitfinex can change any documents that are asked for in the original subpoenas.
- This injunction is to expire in 90 days, yet the NYAG’s office can ask for a two-week extension before this date.
Also worth noting is that the order appears to say that Tether is now able to invest reserves with its normal operations. In a previous court appearance, the company said that its reserves were used in investments, although it is not clear what those funds are being invested in.
A company spokesperson would not comment immediately.
They later released a statement and praised the decision the Judge made:
“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.”
The bitcoin exchange said that the NYAG's office also ignored "our previous history, and voluntary co-operation with them" and had acted "in bad faith."
They concluded: “We will vigorously defend against any action by the New York Attorney General’s office, and we remain committed, as ever, to protecting our customers, our business, and our community against their meritless claims.”
The order from the Judge arrived just a few weeks after a preliminary injunction secured by the NYAG which froze Tether's assets as well as asking for paperwork about a $900 million credit line and $625 million loans offered to Bitfinex. The exchange required the funds to continue being able to process withdrawals from customers after its loss of access to around $850 million that was held by payment processor Crypto Capital.
Ravid Yosef and Reginald Fowler, the operators at Crypto Capital, were indicted later for providing illegal banking services to cryptocurrency companies by the Department of Justice.