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The lawsuit filed in 2019, which claims crypto exchange Bitfinex and its sister company Tether manipulated the crypto market to issue USDT to inflate Bitcoinâs price, has taken a new turn.
United States District Court for the Southern District of New York has now ordered stablecoin issuer Tether to produce financial records of USDT to assess its claims regarding the assetâs backing.
Assessing USDT Backing Claims
As per the latest order, the NY court has asked the company to provide all information in the form of âgeneral ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements.â
Records with regards to crypto and stablecoin transfers by Tether with the timing of the trade execution will also need to be furnished.
Tetherâs motion to block the release of its financial records was dismissed by the presiding Judge even as the attorneys representing the stablecoin firm cited the entire process to be âincredibly overboardâ and âunduly burdensome.â While further stating that the court is in no position to deny the relevance of the documents, Judge Katherine Polk Failla noted,
âThe documents sought in the transactions RFPs appear to go to one of the Plaintiffsâ core allegations: that the Defendants engaged in crypto commodities transactions using unbacked USDT, and that those transactions âwere strategically timed to inflate the market.â Plaintiffs raised the relevance of these documents to the Defendants and the Defendantsâ main objection was not the documentsâ relevance, but instead that the requests were overbroad.â
While backing the request, the Judge also stated that the records are important to assess the backing of USDT with USD and to allow a forensic accountant to assess the stablecoinâs reserve.
Tetherâs Turbulent Past and Growth
The marketâs reliance on USDT has been a bone of contention for years, and the company behind it has faced heightened pressure from regulators, investors, economists, and growing legions of skeptics. In 2021, Tether reached a hefty settlement of $18.5 million with the New York Attorney General (NYAG), stating that the company lied about its reserves and further calling USDT âa stablecoin without stability.â
That was the conclusion of a closely-watched legal dispute that ended with the termination of trading activity of both Tether and Bitfinex with New Yorkers.
The crash of algorithmic stablecoin TerraUSD (UST) earlier this year was catastrophic for the entire crypto industry, but Tether managed to weather the crisis rather flawlessly. Despite the regulatory hiccups, as well as the growth of several alternate stablecoins, Tether has grown rapidly over the years, with nearly $70 billion in circulation.
The post US Court Orders Tether to Provide USDT Backing Financial Records appeared first on CryptoPotato.
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