Crypto exchange Bitfinex and stablecoin operator Tether applied to a New York court to order the state attorney general to reject a request for information provided by Coindesk about the companies' financial reserves.
Pursuant to New York's Freedom of Information Act (FOIL), CoinDesk reporters asked the State Attorney General (NYAG) to provide access to financial documents handed over to NYAG by Bitfinex and Tether. The reporters asked for information detailing reserves that back USDT stablecoins. Bitfinex and Tether provided this information to NYAG in May 2021 as part of an amicable agreement with the Attorney General's Office, which ended months of litigation. As part of the settlement, Bitfinex and Tether do not recognize or deny NYAG's findings, and agreed to pay $18.5 million and stop trading with New Yorkers and businesses.
According to CoinDesk, Tether representatives first approached NYAG directly with a request not to provide this information to reporters, and the attorney general's office denied the request. But CoinDesk decided to appeal this decision and went to court in New York. The petition was granted.
On August 31, Tether and Bitfinex filed a petition to prevent journalists from accessing information. The companies insist that the transmission of the requested information to the media could jeopardize their competitive advantage and the investment strategy that other companies can use in their fight against Tether for market share.
"Bitfinex and Tether have spent years cultivating non-public relationships with financial institutions around the globe that are capable of processing a high volume of high value transactions efficiently.... This excellent customer experience is central to Bitfinex and Tether’s success in the marketplace, but could easily be replicated by competitors were the companies’ network of financial relationships publicly disclosed."
But CoinDesk reports that in their request, the journalists only asked for information regarding the Tether's reserves. This information was released by Tether this year, but, apparently, CoinDesk decided to check the published report of Tether and the information provided by the company to the Attorney General of New York for compliance.
As a spokesman for Tether told The Block, "we vigorously oppose the notion that proprietary information of our company, or any company in our community, should be made public simply to satisfy Internet trolls or other detractors."