Tether has agreed to a New York judge’s order to submit financial documents to prove that its stablecoins, USDT, are backed by the U.S. dollar.
Judge Katherine Polk Failla ordered Tether to disclose USDT’s “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements.” She also requested Tether to share information on USDT’s trade timings and the issuer's account details in three crypto exchanges—Bitfinex, Bittrex and Poloniex.
“We had already agreed to produce documents sufficient to establish the reserves backing USDT, and this dispute merely concerned the scope of documents to be produced,” Tether said.
“As always, we look forward to dispensing with plaintiffs' baseless lawsuit in due course."
Tether’s legal representatives called the order “unduly burdensome.” In another case against the company, Tether also claimed that its financial data was sensitive and revealing it to the public would jeopardize the business.
“In any other industry, this type of proprietary, competitively sensitive information would be clearly and strongly protected, and the same should be true for us and for any other company in the crypto ecosystem,” Tether explained in a press release.
“Therefore, we vigorously oppose the notion that proprietary information of our company, or any company in our community, should be made public simply to satisfy Internet trolls or other detractors.”
Judge Failla dismissed the request to block her order, saying that the documents requested by the court were “undoubtedly important.” The judge said that the company had produced “sufficient documents” when requested by the New York Attorney General and the Commodity Futures Trading Commission for its earlier cases.
Tether is in the poop, so they're pumping BTC to mask the news. Cash out while you can.— your #1 source for absurdist true crime 🐍👑 🌷 (@davidgerard) September 21, 2022
This order was related to a lawsuit directed at iFinex—the parent company of Tether and Bitfinex—which alleged the company to have manipulated the crypto market. The suit was initiated in 2021 by a number of crypto traders and involved several clauses. According to the traders in one of the clauses, Tether propped up Bitcoin (BTC)’s price by making a large purchase using USDT.
Previously in June 2018, a group of researchers from the University of Texas at Austin released a report saying that a “large player” on the Bitfinex platform had used USDT to buy BTC when the value dropped, which caused BTC’s value to rebound. A follow-up study released later by a professor at the University of Queensland, however, revealed that the effect of the large purchase was not “statistically significant.”
Tether’s U.S. greenbacks reserve
Tether has claimed that it currently holds $68.15 billion of collateral assets against $67.96 billion of liabilities. The company explained that most of its assets were cash and commercial papers. Tether regularly publishes results of internal audits by independent accounting firms.
The crypto company faced a similar legal issue in the past when the New York Attorney General closed Bitfinex’s operation in the state. The stablecoin issuer had to pay $18.5 million after the investigation concluded that the company did not hold sufficient U.S. dollars to back its circulating tokens.
Tether recently broadened its USDT issuance scope to the euro, the Australian dollar, the Chinese offshore yuan and the Mexican peso. Currently, Tether’s native token is the third-largest in the world in terms of market capitalization. The value of its circulating tokens on Wednesday was $68 billion.