December 8, 2022


Stablecoin issuer Tether has received a court order to produce financial records proving its support for USDT. New York Northern District Court Judge Catherine Polk Faila, ranking to Tether on Tuesday at the request of the plaintiffs to prove its reserves. Tether’s latest request comes as part of lawsuit It was filed in 2019 by a group of traders against iFinex, the parent company of the Tether and Bitfinex exchange.

The case includes a 2018 research report by the University of Texas. Experts found that Tether’s sister company Bitfinex had bought Bitcoin using unbacked USDT to intentionally inject the price of BTC. This led to the collapse of more than 1 trillion market.

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After 22 months of investigation, the lawsuit ended in a $18.5 million settlement. The New York Attorney General (NYAG) stopped investigating Bitfinex and Tether in February 2021, as the companies agreed to cut services to New Yorkers.

In addition, the attorney general found that iFinex mixed company and user funds in order to block the $850 million losses it incurred. Because of a lawsuit against her partner Crypto Capital Corp. Payment Channel.

Understandably, it indicates that Tether’s USDT was not backed by 100% reserves for a time space around November 2018, NYAG said. While the company claims that its stablecoin, USDT, is always backed by a 1:1 ratio of the US dollar. Hence, Tether is responsible for publishing a quarterly report on its supporting assets as part of the settlement.

USDTUSD
USDT price is currently trading at less than $1. | Source: USDTUSD price chart from TradingView.com

Rope intends to keep the details of his reserves secret

Although tether Attaching documents to their website By disclosing its reserves, the report does not provide an in-depth picture of its supporting assets.

That is why the judge has now ordered the respondent company to release the information “general ledgers, balance sheet, income statements, cash flow statements, profit and loss statements (…) as it relates to supporting USDT (Requests for Proposals for Financial Records). [requests for proposal]) and Crypto Goods Transactions (RFPs for transactions).

The court order also requires the company to provide details of its accounts in Poloniex, Bitifinex and Bittrex.

Lawyers representing Tether attempted to overturn the judge’s order, calling it “unnecessarily burdensome.” In addition, they claimed that disclosure of the composition of its reserves would be detrimental to its business.

The defendants were added during the court ruling;

The plaintiffs provide no justification for such unusual requests, merely stating that they must assess whether the transactions were strategically timed to inflate the market.

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But Faila noted that the documents requested by the plaintiffs are undoubtedly important in determining USDT support in US dollars. Accordingly, the judge confirmed her decision by adding:

The plaintiffs clearly explain why they need this information: to evaluate USDT support in US dollars. (…) The documents requested in the RFP for transactions appear to go to one of the plaintiffs’ primary claims: that defendants B/T engaged in crypto-commodity transactions using unsupported USDT.

Featured image from Pixabay and chart from TradingView.com



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