A U.S. judge is ordering stablecoin issuer Tether to produce proof of the assets it claims backs up its dollar-pegged USDT, the largest crypto asset of its kind in the world.
In a new court order, Judge Katherine Polk Failla of the Southern District of New York mandates that Tether provide financial records on the digital assets and funds that back USDT.
The plaintiffs, who allege that Tether was issued completely unbacked as a means of inflating the price of Bitcoin (BTC), convinced the Judge that the information they are requesting is necessary to the case.
“Plaintiffs plainly explain why they need this information: to assess the backing of USDT with US dollars, and to allow a forensic accountant to assess the USDT reserve.
And although the Court understands the [Defendants’] position to be that Plaintiffs’ theory is shifting with regard to ‘other assets’ and other funds, at this stage in the litigation and without compromise by the parties, the Court takes as true Plaintiffs’ representation that this information is necessary to assess its claims regarding USDT backing.
The documents sought in the transactions RFPs [request for proposals] appear to go to one of Plaintiffs’ core allegations: that the [Defendants] engaged in crypto commodities transactions using unbacked USDT, and that those transactions ‘were strategically timed to inflate the market.’”
Tether argued in court that the request should be denied because they are “incredibly overbroad” and “unduly burdensome.” The firm also released a separate statement saying that the requests were part of a “meritless” case against it.
“The order that was issued yesterday in the case captioned In Re Tether and Bitfinex Crypto Asset Litigation, is a routine discovery order and does not in any way substantiate plaintiffs’ meritless claims.
We had already agreed to produce documents sufficient to establish the reserves backing USDT, and this dispute merely concerned the scope of documents to be produced. As always, we look forward to dispensing with plaintiffs’ baseless lawsuit in due course.”
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