CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
Yesterday, The New York Supreme Court Ruled That The State's Attorney General (NYAG) Had Jurisdiction To Oversee The Case Brought Around Bitfinex (BFX) And Tether. While BFX Executives Will Certainly Resent The Imposition, The Decision Is Less Impactful Than When It Was First Launched - That Said, There Are Implications For The Industry As A Whole
As a reminder, the lawsuit centers around an $850M loan made between Tether and BFX that the NYAG claims was not properly disclosed. In July, attorneys representing the two firms moved to dismiss the proceedings, arguing that BFX and Tether, 'barred US persons from the platform' and have therefore not done business in New York. However, with this decision previous court rulings that limited the scope of documents which the firms must produce has been lifted. BFX and Tether now have until October 14 to turn over documents relevant to the NYAG's investigation, something the firms had sought to avoid.
Crypto Takeaway: Since the lawsuit was originally launched, BFX conducted a $1B sale of the LEO exchange token, effectively plugging any capital holes around customer funds. Nonetheless, giving an Attorney General's office broad access to your affairs and assuming additional legal costs is far from ideal. The market, at this point, is treating the decision as a BFX corporate issue with exchange spreads remaining in relatively normalized ranges. From an industry standpoint, however, the fact that Bitfinex had been consciously avoiding business in the US yet still is now subject to this level of scrutiny does not bode well for international exchange operation in North America and other US-friendly regions. We've already seen several products and exchanges bar regions such as Canada for fear of even potential cooperation with the US. Yesterday's precedent likely reinforces those trends.