The case involving Tether, the USDT stablecoin issuer, is ongoing, with CoinDesk now joining the case formally. The case is at the New York Attorney General’s office, and it will look into the details of Tether’s reserve composition.
The case with Tether started in June 2021 after CoinDesk filed a Freedom of Information Law Request (FOIL) for documents on Tether reserves.
Tether’s case with the New York Attorney General’s office
In May 2021, Tether produced information regarding its reserves, and it submitted these details to the New York Attorney General’s office. The agreement on this settlement finalizes the legal case between Tether and the Bitfinex cryptocurrency exchange platform.
The case looked into whether iFinex, the parent company behind Tether, misrepresented the reserve backing of the USDT stablecoin.
Tether’s attorney had requested the Attorney General’s office to deny a request to access its record, and the request was granted. However, CoinDesk appealed this decision later, and it was granted access to these documents.
Tether is now seeking to block access to this information. In its argument, Tether notes that giving out these details would suppress its competitive advantage and affect its investment strategy. The company further claims that releasing these details would affect its partnerships.
On the other hand, CoinDesk’s argument states that the company‘s interest was in the documents that showed a breakdown of its reserves. In response, Tether says that these documents are already accessible to the public. Tether notes that it does not want to disclose additional details on its business because this would allow bad actors to access sensitive details.
Issue of Tether’s reserve assets
Several parties have expressed concerns over the Tether stablecoin. The USDT stablecoin’s value is pegged at one dollar, with the company stating that it has dollar reserves to back the value. The company notes that one USDT is backed by one dollar.
However, questions have arisen on whether Tether really has $71 billion in a bank, given that this is the stablecoin’s market cap. Members of the crypto community have also noted that the issue of Tether posed a systemic risk to the crypto sector.
Some critics in the sector state that the use of USDT is to keep the prices of Bitcoin high. In February 2021, Tether’s reserve backing was investigated by the New York Attorney General’s office leading to an $18.5 million fine.
