September 1, 2021, | AtoZ Markets – Cryptocurrency exchange Bitfinex and stablecoin issuer Tether have asked a New York court to order the state attorney’s office to prohibit media and other organizations from requesting information on the status and structure of USDT reserves over the past few years.
Under the Freedom of Information Act, members of the public can request legal documents from authorities, including those related to litigation and the activities of legislators. CoinDesk requested information about the collateral of Tether obtained by the prosecutor’s office as part of the settlement of claims against the two companies in May this year.
According to CoinDesk, initially, Tether’s lawyers asked the prosecutor’s office to deny the request and received an affirmative answer. CoinDesk successfully challenged this decision. Now Tether is trying to prevent the disclosure of documents in court.
A similar request was issued by The Block and received a response that the information of interest to it may not be subject to disclosure if it constitutes “a commercial secret or may cause significant damage to the competitive position of the company in question.” This is the same argument used by Tether, claiming that its partners and business practices are trade secrets.
According to the company’s lawyers, the information of interest to the publication will lead to the disclosure of its investment strategy, which allows it to gain an advantage over competitors.
“The same is true for Tether’s internal investment strategy. Complete information about the investment strategy that allows Tether to achieve its profitability and related to relationships with counterparties and issuers is a key element of the company’s business, which it does not want to disclose to the general public. The competitive advantage that Tether achieves with its investment strategy will be diminished if competitors get a complete picture of Tether’s investments,” the document says.
The company also claims that information of interest to the publication will compromise its relationship with partners, which are of primary importance for attracting customers:
“Bitfinex and Tether have spent years building non-public relationships with financial institutions around the world that are capable of efficiently handling large volumes of transactions for large amounts. Excellent customer experience is central to Bitfinex and Tether’s success in the marketplace, but can be easily replicated by competitors if the financial relationships of the companies are publicly disclosed.”
CoinDesk, however, notes that its request relates solely to information that Tether has already promised to make public, namely information about the reserves sent to the prosecutor’s office in May.
“Tether has offered to publish its reserves on a regular basis as part of a settlement agreement with the New York Attorney’s Office. We intend to make this information available to both the prosecutor’s office and the general public,” said Stuart Hegner, chief attorney for Bitfinex and Tether, in May.
The company, which first began publishing such information this year, says that all the information it needs is already available to the general public in a form that does not threaten its competitive advantage. In addition, the firm claims that granting the request would lead to the disclosure of its compliance measures that could be exploited by attackers.
“In any other industry, no one would put up with this. The same should apply to us and any other company in our industry,” Tether writes on Twitter.
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