New York court orders Tether to provide documents on USDT reserve News ▸ New York ▸ Tether ▸ Stablecoins
New York court orders Tether to provide documents on USDT reserve
Tether must also provide information about its accounts at Bittrex, Bitfinex, and Poloniex.
2 min read
Updated: Sep. 21, 2022 at 9:53 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
A New York court ordered Tether to provide financial records showing the backing for USDT.
According to the order, Tether is to produce all records of transfer of trade of any cryptocurrency or stablecoins by the company and other documents such as “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements.”
Tether must also provide information about its accounts at Bittrex, Bitfinex, and Poloniex.
Tether argued against the order
The stablecoin issuer argued against the order, saying it was overboard and burdensome, but Judge Katherine Polk Failla disagreed. According to her, the plaintiffs clarified why the information was necessary.
Judge Failla wrote:
“The documents sought in the transactions RFPs appear to go to one of the Plaintiffs’ core allegations: that the … Defendants engaged in cyptocommodities transactions using unbacked USDT, and that those transactions “were strategically timed to inflate the market”
The order is linked to a lawsuit that accuses Tether and Bitfinex of manipulating the crypto markets to the detriment of traders.
The plaintiffs claim that Tether lied about the USDT backing and also alleged that the stablecoin was used to buy Bitcoin (BTC), inflating the crypto market and causing the eventual crash.
According to the plaintiffs, Tether caused over $1 trillion in damages to the crypto market.
Tether did not respond to a request for comment as of press time.
Algorithmic stablecoin faces 2-year ban
Bloomberg reported that US legislators are working on a comprehensive stablecoin regulation bill that could have a far-reaching effect on the industry’s operations.
According to the report, the legislators’ bill would ban algorithmic stablecoins similar to TerraUSD for the next two years. The report stated that it would be illegal to create or issue new “endogenously collateralized stablecoins.”
The bill would also allow banks and non-banks to issue stablecoins based on established procedures. However, businesses would be prevented from mixing their assets with customer funds -stablecoins, private keys, and cash- in case of bankruptcy.
Meanwhile, the bill would direct the Federal Reserves to study the effect of a digital dollar project on the economy and the financial privacy of citizens.
Terra’s implosion has led to increased calls for regulation of the nascent industry.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.
Bitcoin
$98,508.94
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Terra Classic
$0.00012
Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems.
TerraClassicUSD
$0.02113
TerraUSD (UST) is a decentralized and algorithmic stablecoin on the Terra blockchain.
Poloniex
Poloniex is a US-based cryptocurrency exchange platform offering a wide variety of digital assets.
Bitfinex
Bitfinex is a digital asset trading platform offering state-of-the-art services for digital currency traders and global liquidity providers.
Bittrex
Founded in 2014 by three cybersecurity engineers, Bittrex is a global leader in the blockchain revolution.