The class action lawsuit seeks retribution for damages of more than $1 trillion. It’s based on an allegation made by the New York Attorney General’s office in April that USDT was not backed 1:1 by U.S. dollars and a study published by professors at the University of Texas at Austin alleging that a single account used USDT to drive up half the price of bitcoin’s 2017 surge.
The letter, sent to the U.S. District Court in the Southern District of New York, claims that the plaintiffs’ lawsuit ignores a subsequent version of that academic paper where the authors withdrew one of its central allegations - that trading patterns reveal the issuance of unbacked Tethers.
Last week, in a statement, Tether described the revised paper as “a watered-down and embarrassing walk-back” of the first version. As for its reserves, the company also points to the Transparency section of their website that shows $4.5 billion in assets, with a $100 million cushion above its liabilities.
In the letter, Tether also claims that the plaintiffs could not prove Tether and Bitfinex, the exchange that issues Tethers, were responsible for the transactions that occurred or that the traders actually suffered injury from the market crash.
The letter also refuted claims that Tether had monopoly power over the stablecoin market, had participated in racketeering, and committed common law fraud among other allegations.
The original lawsuit, filed by David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz and Pinchas Goldshtein, was filed by Vel Freedman and Kyle Roche – the lawyers who won a federal case against Craig Wright. Bitfinex, Tether, Digfinex and current executives; former chief strategy officer Philip Potter; and payment processor Crypto Capital are named as defendants in the case.
Tether image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.