Update (09:40 UTC, Aug. 20 2019): Bitfinex (iFinex) and Tether are appealing yesterday's decision by the New York Supreme Court, according to a notice submitted later in the day.

Bitfinex and Tether must continue turning over documents about an alleged $850 million cover-up to the New York Attorney General (NYAG), a judge ruled Monday.

As a result, the crypto exchange and stablecoin issuer will need to continue cooperating with courts to make public information about a loan the latter company made to Bitfinex, though the companies are expected to appeal the ruling.

The decision gives Bitfinex and Tether another 90 days to turn over documents amid the ongoing investigation by the New York Attorney General's office (NYAG), which filed for an injunction in April after alleging that Bitfinex was trying to cover up the loss of $850 million held by a payment processor called Crypto Capital.

Cohen said the injunction would expire on Oct. 14, adding:

At the time, the NYAG's office claimed that Bitfinex and Tether had negotiated a line of credit, enabling Bitfinex to borrow as much as $700 million from Tether's reserves. The line of credit would have allowed the exchange to borrow another $200 million, but an injunction imposed by Cohen in May froze any further lending.

However, Bitfinex and Tether were still required to hand over a number of documents pertaining to the companies' relationship and the deal. Attorneys for the companies filed a motion to dismiss the NYAG's case entirely, claiming that the government did not have any jurisdictional authority over the companies, which claimed to not operate in New York or serve any New York-based customers.

While oral arguments were heard in court on July 29, Cohen said he needed a bit more time to deliberate before making a final ruling.

In a letter submitted a day after the hearing, Bitfinex and Tether attorneys said the companies had already spent $500,000 just finding documents to comply with the existing injunction, putting 60 different lawyers to work to pull files from 10 different communications systems.

The firms have since appealed Monday's ruling.

The firms stated in the document:

"The trial court lacked personal jurisdiction because service was defective and because Petitioner failed to show that the Respondents engaged in purposeful activity toward New York. The trial court lacked subject matter jurisdiction because the cryptocurrency that is the focus of Petitioner's investigation is neither a commodity or security, as required for jurisdiction under the Martin Act.

The trial court incorrectly held that the Martin Act could be applied extraterritorially because the language of Gen. Bus. L. § 354 does not provide for extraterritorial reach. Respondents seek a reversal of the Decision and Order on Motion in its entirety."

New York Supreme Court image via CoinDesk