Stablecoin Issuer Tether Ordered to Produce Documents Showing Backing of USDT
The order relates to a lawsuit that alleges unbacked USDT issuances have caused $1.4 trillion in damage to the market.
Tether has been ordered by a U.S. judge in New York to produce financial records relating to the backing of USDT as part of a lawsuit that alleges Tether conspired to issue the stablecoin as part of a campaign to inflate the price of bitcoin (BTC).
- The order requires Tether to produce “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements” as well as records of any trades or transfers of cryptocurrency or other stablecoins by Tether including information about the timing of the trades.
- It also orders Tether to share details about the accounts it holds at crypto exchanges Bitfinex, Poloniex and Bittrex.
- While attorneys representing Tether moved to block the order to release, calling it “incredibly overboard” and “unduly burdensome,” the presiding judge disagreed, writing that the “documents Plaintiffs seek are undoubtedly important.”
- “[The] Plaintiffs plainly explain why they need this information: to assess the backing of USDT with US dollars,” wrote Judge Katherine Polk Failla.
- “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 judge continued.
- Tether subsequently issued a statement labelling the order "a routine discovery" that "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," Tether said.
- Concurrently, there is also a lawsuit before the New York Supreme Court to have the New York Attorney General release documents it gathered in its investigation into Tether’s reserves. CoinDesk is a party to this case.
- The New York Attorney General’s probe into Tether’s reserves concluded in February 2021 with an $18.5 million settlement.
UPDATE (,Sept. 21 15:05 UTC): Adds Tether response in sixth, seventh bullet points.
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.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.