Bitfinex and Tether must turn over documents detailing their financial relationship and history to the New York Attorney General’s office (NYAG), a New York Supreme Court justice ruled again on Thursday.

Judge Joel M. Cohen, the judge who has been overseeing the NYAG’s inquiry into Bitfinex and Tether, made the ruling after a charged, hour-long hearing on Thursday. Counsel for the crypto companies argued the document production order is too broad while the NYAG’s office argued the order is reasonable, saying Bitfinex has not submitted anywhere near the sufficient documents despite the amount of time that has elapsed since the case began.

Cohen didn’t set a firm deadline for when Bitfinex and Tether would have to produce these documents, leaving that decision to a special referee, but said a deadline would need to be set. As part of his order, he extended an injunction that would have ended in the next few weeks barring Tether from loaning funds to Bitfinex by 90 days.  

Cohen opened the hearing by noting that the First Department – the appeals court that rejected Bitfinex’s last effort to dismiss the case – had specifically limited the role he could play in the ongoing investigation. Through the hearing, he refused to make specific rulings limiting the scope of the document production request.

The parties are expected to report the schedule back to the judge after the special referee makes that decision.

‘Literally impossible’

“We ought to be allowed to push back,” said Charles Michael, an attorney with Steptoe and Johnson, representing Bitfinex in an ongoing case against the New York Attorney General’s office.

Michael was referring to Bitfinex’s effort to reduce the scope of a document production order the NYAG secured in April 2019, asking for details about the crypto exchange’s financial history and transactions with Tether, the stablecoin issuer with which it shares corporate owners and key executives.

Read more: NY AG Asks Court for New Order to Make Bitfinex Turn Over Tether Loan Documents

Michael went so far as to say it was “literally impossible to comply with” all of the document demands, because the NYAG’s office has asked for “all documents” around USDT. 

John Castiglione, senior enforcement counsel at the NYAG, pushed back against the idea that the office is looking for all documents about USDT transactions, saying the department has specifically requested order and trade information, documents about evidencing purchases, tax returns and bank account statements – what he referred to as “core business documents.”

“If there are documents that don’t exist or systems that are no longer maintained, respondents should tell us,” he said.

Extended injunction

Cohen also examined the injunction he put in place to prevent Tether loaning funds to Bitfinex, asking Castiglione to justify extending it.

The government attorney said the respondents have yet to explain what happened to the first $600 million Tether loaned to Bitfinex, and he advocated keeping the injunction in place at least until more information was shared. 

Specifically, the NYAG wants to know where the funds went, whether any of the funds went to company executives and why transfers from Tether to Bitfinex were necessary. Castiglione also said that keeping the injunction in place shouldn’t hurt Bitfinex financially, assuming all is well.

“Now what we have heard is, [Tether] started as a $2 billion tether reserve, [and is now] a $14 billion tether reserve. So it seems unlikely that $150 million staying on one side of the business would be catastrophic,” Castiglione said.

Michael said the conditions which may have justified the injunction in early 2019 – namely, that Bitfinex needed Tether’s funds to fulfill withdrawal requests by its customers – have been dissipated, pointing to Bitfinex and Tether’s profits over the past year and a half.

Read more: Bitfinex Doesn’t Have to Compile Documents During Appeal, Judge Says

“I think it’s very difficult to justify an ongoing injunction,” Michael said. “We’ve now had 17 additional months of disclosure. All the dirty laundry about Crypto Capital has been aired … Whatever risk there may have been 17 months ago is gone.”

Crypto Capital is the payment processor on which Bitfinex apparently stored its customers’ funds, without securing any guarantees about the funds’ safety. The operators of Crypto Capital were indicted last year, and Bitfinex has filed for a number of subpoenas to try and recover the nearly $1 billion it lost.

Michael also said the market has shown confidence in Bitfinex and Tether, evidenced by the fact that $15 billion tokens are in circulation as of Thursday. 

“No one is at risk, there’s not any allegation someone has tried to redeem and had any trouble,” he said. “There’s no risk, whatever risk there may have been 17 months ago is gone.”

Cohen ultimately extended the injunction, but left instructions for the NYAG to advise by the end of that 90-day period whether it has sufficient information to determine next steps.