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Court Orders Tether USDT To Prove Its Backing

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Tether USDT

Key Points:

  • Tether USDT to Publish Financial Records
  • Tether Doesn’t Want to Comply with the Court Order
  • Tether Facing More Lawsuits

Tether has been ordered by New York Judge Katherine Polk Failla, to come forward with documents proving their Tether USDT backing. The lawsuit claims this unbacked cryptocurrency was used for price manipulation in Bitcoin (BTC) currently valued at $370 billion according to the Coinmarketcap data which caused no less than $1.4 trillion damage to crypto markets as well.

USDT is the largest stablecoin in the world, with a market cap of almost $68 billion. The question of how exactly Tether USDT is backed has plagued the project for years. Initially, Tether claimed that each USDT was backed 1-to-1 by US dollars, but recent research casts doubt on these claims.

Tether USDT To Publish Financial Records

According to a court order, Tether has been told to produce all financial records to prove the backing of the USDT stablecoin. These documents include balance sheets, general ledgers, cash-flow statements, income statements, and profit and loss statements.

On Sept. 20, the court ordered Tether to share this information related to its stablecoin. In addition to disclosing the timing of each trade and records of its activity on other exchanges, the company will have to fully disclose information about its account at Bitfinex, Poloniex, and Bittrex.

Tether Doesn’t Want To Comply With The Court Order

Tether refutes the claims, saying that the information requested by the court is commercially sensitive and if revealed, would cause adverse effects to their company. Lawyers representing Tether had vigorously opposed the order, arguing that it was “incredibly overboard” and “unduly burdensome.” But Judge Polka Failla dismissed that request, pointing out that the “documents Plaintiffs chase are unquestionably important” to the case. 

In a statement issued Wednesday, Tether USDT called the order a “routine discovery request” that does not prove allegations made by the plaintiff. In addition, the company wrote: “we were already in agreement about what documents to produce that would prove the reserves backing USDT, and this dispute only concerned the scope of documents to be produced. We will always look forward to defending our clients against baseless lawsuits.”

Tether Facing More Lawsuits

It seems that Tether needs to be more accountable right now. It’s facing a lawsuit over allegations that it caused price inflation of bitcoin, and another lawsuit is running concurrently with this one. Another suit is being brought against Tether at the New York Supreme Court. The suit calls on the company to release records related to an inquiry into its reserves.

The New York Attorney General’s office conducted an inquiry into that matter, and its findings were released in February 2021, following an $18.5 million settlement. As of this writing, the price of Tether USDT has remained unchanged. It is trading at $1.00 with a volume of $53 billion.

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