(Bloomberg) -- Crypto exchange Bitfinex faces a trial over New York Attorney General Letitia James’s claim that it hid the loss of comingled client and corporate funds.

New York state Justice Joel M. Cohen denied Bitfinex’s request to dismiss the suit, and ruled that a temporary hold on the attorney general’s investigation should be dissolved. The companies behind Bitfinex in May won a partial block on demands for information from the attorney general while they sought to dismiss the lawsuit.

In April, James accused the companies behind Bitfinex and the cryptocurrency Tether of hiding the loss of more than $850 million in client and corporate funds.

Hong Kong-based iFinex Inc. claimed that New York has no jurisdiction in the matter because U.S. residents aren’t allowed to trade on the exchange, which is registered in the British Virgin Islands. The litigation has impacted the companies’ ability to freely use their funds, and pushed Bitfinex to raise what it claims was $1 billion by issuing a new token.

The case is In the Matter of the Inquiry by Letitia James, attorney general of the State of New York, 450545/2019, Supreme Court of the State of New York (Manhattan).

(Adds chart on Tether ownership)

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net;Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Joe Schneider, Dave Liedtka

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