Stablecoin issuer Tether has received a court order to produce financial records proving its USDT backing.Judge Katherine Polk Failla of the Upstate District Court in New York issued Order Tether will trade on Tuesday amid demands from plaintiffs to prove its reserves. Tether’s latest order is litigation A group of traders filed a lawsuit in 2019 against iFinex, the parent company of the Tether and Bitifinex exchanges.
The case involved a 2018 research report by the University of Texas. Experts have found that Tether’s sister company Bitfinex bought Bitcoin with unsecured USDT to deliberately drive up the price of BTC. And caused the market to crash by more than 1 trillion.
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After a 22-month investigation, the lawsuit ended in an $18.5 million settlement. The New York Attorney General (NYAG) stopped investigating Bitifinex and Tether in February 2021, and the companies agreed to cut services to New Yorkers.
In addition, the attorney general found iFinex confused company and user funds to stop the $850 million in losses it faced due to lawsuits against its partners Payment Channel Crypto Capital Corp.
Understandably, this suggests that Tether’s USDT was not 100% backed by reserves in the time-space around November 2018, the NYAG said. Although the company claims that its stablecoin USDT is always backed 1:1 with the US dollar. Therefore, as part of the settlement, Tether is obliged to publish quarterly reports on its backing assets.
Tether intends to keep details of its reserves secret
Although the tether Attach files on their website The report revealed its reserves and did not provide an in-depth description of its backing assets.
This is why the judge is now ordering the defendant company to publish information on its “general ledger, balance sheet, profit and loss statement, cash flow statement and profit and loss statement (…) as they relate to USDT support (financial record RFP). [requests for proposal]) and crypto commodity trading (trading RFP). ”
The court order also requires the company to provide details of its accounts on Poloniex, Bitifinex and Bittrex.
Lawyers representing Tether sought to overturn the judge’s order, saying it was “too burdensome.” Furthermore, they claim that revealing the composition of their reserves would be detrimental to their business.
Defendants added during court decisions;
The plaintiffs offered no reason for such special requests, other than to say they had to assess whether the deal was strategically timely inflating the market.
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But Failla noted that it is undeniable that the documents sought by the plaintiffs are important in determining whether USDT is backed by the U.S. dollar. Therefore, the judge confirmed her decision, adding:
The plaintiffs clearly explained why they needed the information: to value USDT backing in dollars. (…) The documents sought in the trading RFP appear to relate to one of the plaintiffs’ core allegations: that the B/T defendants used unsecured USDT to trade crypto commodities.
Featured image from Pixabay and chart from TradingView.com