Court orders Tether to disclose collateral backing the USDT stablecoin

A New York court обязал Tether Limited to disclose financial documents to assess the reserves backing the USDT stablecoin in a case concerning possible market manipulation.

In December 2021, Matthew Anderson and Shoun Dolifka filed a class action, accusing the issuer of misrepresenting the backing of the “stablecoin.” They cited proceedings involving the firm and its affiliate Bitfinex.

Ten months before filing this suit, the companies reached an agreement with the New York Attorney General’s office in a case concerning financial operations tied to a loss of $850 million. Bitfinex and Tether agreed to pay $18.5 million.

Subsequent settlements of similar allegations by the CFTC cost them $42.5 million.

As part of the current proceeding, the issuer must produce “the general ledgers, balance sheets, income statements, cash flow statements and financial results” in addition to trading data.

The court also sought detailed information regarding Tether Limited accounts on the cryptocurrency exchanges Bitfinex, Poloniex and Bittrex.

Representatives of the company described the order as “unduly burdensome.” The court ruled that it was necessary to “assess the backing of USDT.”

Earlier in September 2021, the court dismissed half of the claims against Tether and Bitfinex in the previously filed class action for $1.4 trillion.

In August 2022, the world’s fifth-largest auditor confirmed the backing of USDT.

About a month earlier, Tether Limited обязался to eliminate the share of commercial paper in the reserves by year-end. In the second quarter, the position fell by 58%.

In mid-May the stablecoin deviated from the US dollar peg, testing the $0.94 level, but later returned to parity.

Earlier, Wall Street Journal reporters described a hypothetical “technical insolvency” scenario for Tether should reserve assets fall by 0.3%.

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