- US District Court for the Southern District of New York Judge Katherine Polk Failla has ordered Tether to prove the existence of 1-to-1 backing of its stablecoin Tether (USDT).
- Part of the settlement after the lawsuit between the New York Attorney General’s office and iFinex, the operator of Bitfinex and Tether, requires Tether to submit a series of reports each quarter detailing its reserves to the NYAG.
The judge of the United States District Court for the Southern District of New York, Katherine Polk Failla, ordered Tether prove the existence of 1-to-1 backing of its namesake stablecoin, Tether (USDT).
The company must submit “ledgers, balance sheets, income statements, cash flow statements, and profit and loss statements” and other documents to court.
This mandate is part of a demand for market manipulation that began in 2019. The initial complaint from a group of investors noted that the firm manipulated the crypto market by issuing unbacked Tether with the clear goal of inflating the price of digital currencies such as Bitcoin.
In this regard, the court considers it necessary that such evidence be presented to support Tether’s claims to maintain a treasury that corroborates and supports its stablecoin.
Faced with this ordering, the firm Tether pointed out:
“The order that was issued in the case, titled In Re Tether and Bitfinex Crypto Asset Litigation, is a routine discovery order and in no way substantiates the plaintiffs’ meritless claims. We had already agreed to produce sufficient documents to establish the reserves that support USDT, and this dispute was simply about the scope of the documents that would be submitted. As always, we hope to dispense with the plaintiffs’ unfounded claim in due course.”, said the company it’s a statement.
Tether and the USDT Backing Controversy
It’s important pointing that USDT is the largest stablecoin by market capitalization crypto, as well as currently being the third largest digital currency overall, second only to the popular Bitcoin and Ether, with almost $68 billion dollars in circulation.
Now, the question of whether the company really has the backing of each token has been present in the crypto market for years.
It can be said that Tether at the beginning of its operations guaranteed that each USDT token would be backed 1 to 1 with US dollars.
About, In 2021, the New York Attorney General (NYAG) ended an investigation into Tether and its parent company, Bitfinex, reaching an $18.5 million settlement agreement.
The prosecutor managed to uncover that company and customer funds were commingled to hide $850 million in losses resulting from police action, at one of its payment processing partners, Crypto Capital Corp.
According to what was pointed out by the New York Attorney General, this translates to the fact that USDT was not 100 percent backed for a period of time after November 2018.
However, today Tether now again guarantees that its tokens are “100 percent backed by its reserves.” Likewise, Part of the deal requires Tether to submit a series of reports each quarter detailing its reserves to the NYAG.
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