The New York Supreme Court today unleashed the state’s attorney general to investigate a number of businesses behind the tether cryptocurrency. While there are no formal accusations of fraud or other wrongdoing, the opinion gives teeth to multiple subpoenas already filed by the attorney general, which the respondents, including both Tether Holdings Limited and The Bitfinex cryptocurrency exchange, will now have to comply with.
The news comes at an awkward time for Brock Pierce, 39, the creator of the cryptocurrency, who this week announced he was running for President of the United States. A representative of the New York State Attorney General says “we cannot confirm or deny, at this time, whether our investigation includes Brock.”
In 2014, Pierce, who is running as an independent on a pro-technology platform, created the tether currency as a way for cryptocurrency investors to quickly enter and exit a position. Unlike bitcoin and other cryptocurrencies, tether was meant to have a stable price, backed one-to-one by real U.S. dollars. But unlike traditional dollars, it can be moved instantly, while actually cashing out a crypto-asset using banks can take days, and many banks won’t support the service at all.
By November 2018 questions about whether or not the cryptocurrency was actually backed dollar-for-dollar started to circulate and the state attorney general of New York, Letitia James, officially began her investigation. After turning up some promising leads however, an appeal filed by Tether and Bitfinex was granted, and the investigation was halted.
With the opinion letter dated today, that investigation can resume. The result of what state attorney general James uncovers could impact any of countless owners of the tether cryptocurrency, with a total market value of $10 billion, and depending on whether or not what is found is good or bad for tether, pave the way for a flock of new, regulated, competitors.
“Today’s decision validates our office’s ability to use its broad and comprehensive investigative powers to protect New Yorkers,” said James in a statement provided to Forbes. “Not even virtual currencies are above the law. We are pleased with the court’s decision, and will continue to protect the interests of investors in the marketplace.”
Officially, the case involves, BFXNA Inc. and BFXWW Inc., wholly-owned subsidiaries of iFinex, which operates the Bitfinex cryptocurrency exchange, and Tether Holdings Limited the holding company for Tether Limited, Tether Operations Limited, and Tether International Limited. Though Pierce is not mentioned in the opinion, he not only founded Tether in 2014, but is the co-founder of Block.One, behind the 11th largest…