A New York Supreme Court has found that veteran cryptocurrency exchange Bitfinex and its related stablecoin company Tether (USDT) must face claims they concealed the loss of commingled corporate and client funds.

The claims were brought by New York Attorney General Letitia James, who has accused firms associated with Bitfinex and several associated companies of hiding more than $850 million in lost funds.

Bitfinex asserts that its funds were deposited with Crypto Capital — a Panamanian firm accused of providing shadow banking services to virtual currency exchanges — before being seized by government authorities in various countries. They are working to recover the money.

You serve, so we protect

The court rejected the firms’ claim that the court does not have jurisdiction over Bitfinex as it is not based in New York or serves local traders, asserting that several of its staff worked in New York and that USDT had been used by local residents. 

“Today’s decision validates our office’s ability to use its broad and comprehensive investigative powers to protect New Yorkers,” Attorney General James stated. “Not even virtual currencies are above the law. We are pleased with the court’s decision, and will continue to protect the interest of investors in the marketplace.”

Tether dominance extends

The news comes as Tether’s influence over the crypto markets, with Messari recently estimating that the third-largest crypto asset now boasts a market capitalization of more than $10 billion.

According to CoinMarketCap, Tether is the single-most traded crypto asset representing 35% of all daily crypto volume. By contrast, Bitcoin (BTC) pairings equate to nearly 26% of trade activity.