U.S. District Court for the Southern District of New York Judge Katherine Polk Failla has ordered Tether to demonstrate 1-to-1 backing of its eponymous stablecoin, Tether (USDT). The company is required to provide “general ledgers, balance sheets, income statements, cash flow statements, and profit and loss statements” and other documents to the court.
The order was published this Tuesday as part of a case that began as early as 2019: The initial complaint by a group of investors against iFinex, the parent company of Tether and Bitfinex, alleged that the firm manipulated the cryptocurrency market by issuing unbacked Tether with the intention of inflating the price of cryptocurrencies such as Bitcoin (BTC).
Judge Polk Failla dismissed the petitions for iFinex from blocking the order on the grounds that the company had already filed “enough” documents with the Commodity Futures Trading Commission and the New York Attorney General. He considered that the demand for “undoubtedly important” documents is well established since “they seem to go to one of the central allegations of the plaintiffs.”
Previously, in September 2021, Judge Polk Failla dismissed the plaintiffs’ claims against iFinex under the Racketeer Influenced and Corrupt Organizations Act and allegations related to racketeering or the use of racketeering proceeds for investments.
In February 2021, in another settled case with the New York Attorney General’s Office, iFinex has agreed to pay $18.5 million in damages to New York and submit to periodic reporting of its reserves, in addition to ceasing to serve customers in the state. The deal followed a 22-month investigation into whether the company had been trying to cover up its estimated $850 million in losses by misrepresenting the extent to which its USDT holdings were backed by fiat collateral.
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