Tether Compelled to Document Its USDT Backing by New York Judge

A New York court agreed with the plaintiffs’ demand to provide significantly important documents that would aid the fraud case.

A New Court Order

A judge in the US district court in Southern New York, Justice Katherine Failla, has ordered Tether to provide evidence for 1-to-1 support of its stablecoin, the Tether. The court now asked the company to present before it all balance sheets, ledgers, statements on cash flow, income statements, as well as all profit and loss statements in its possession.

The court’s order was published on Tuesday, the 20th of September as part of the case which began in 2019. The initial suit was brought before the court by some investors against Tether, iFinex, and the parent company of Bitfinex. The investors claimed in their suit that the company engaged in manipulating the cryptocurrency market when it issued an unbacked token while it had intentions of inflating the token’s price, as well as other tokens like Bitcoin.

Justice Katherine Failla dismissed a request brought forward by iFinex seeking to block the order. iFinex’s claim is that it has already provided documents significant enough at earlier periods during the case it said they were produced before New York’s Attorney General and the Commodity Futures and Trading Commission office.

Allegations of False Representation

The Justice ruled that the demand of the Plaintiffs for very important documents is properly established since they seem to go to one of the central allegations of the Plaintiffs.

At an earlier time in September 2021, the judge dismissed a claim from the Plaintiffs that was filed against iFinex under an Act of the Racketeer Influenced and Corrupt Organization. It had allegations that were related to racketeering or the usage of funds from racketeering for investing.

In a different case determined by the Office of the Attorney General of New York in February 2021, iFinex agreed that it would pay $18.5 million in damages to the State of New York and also subject itself to a periodic report of the state’s reserves as it also agreed to stop its service to users in the state.

That settlement was achieved after a period of inquiry to know if the company was trying to hide its losses by giving false information about the backing of its USDT reserve by the US Dollar. 

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