A judge in New York has ordered stablecoin issuer to produce financial documents proving the dollar backing of USDT, as part of a lawsuit alleging the firm manipulated crypto markets.
Tether, which is owned by the same company as crypto exchange Bitfinex, has been ordered to release “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements” in addition to information about the timing of the trades. The order also requires Tether to share details about the accounts it holds at crypto exchanges Bitfinex, Poloniex and Bittrex.
Attorneys representing Tether attempted to block Judge Katherine Polk Failla’s order, calling it “unduly burdensome,” but the judge concluded that the “documents Plaintiffs seek are undoubtedly important” in order to assess the backing of USDT with U.S. dollars.
Tether claims that the composition of its reserves is commercially sensitive and revealing it would damage its business.
The lawsuit was started last year by several crypto traders who allege that the company tried to prop up the by purchasing large quantities of it with unbacked USDT tokens, among other accusations.
This followed a June 2018 report by researchers from University of Texas at Austin that showed one large player on the Bitfinex exchange used Tether tokens to “purchase Bitcoin when prices are falling,” resulting in the price of Bitcoin rebounding.
Tether’s financial soundness has come under scrutiny in the past, when the New York Attorney General shut down Bitfinex in New York and ordered it to pay $18.5 million, following state investigations last year that concluded Tether did not hold enough U.S. dollars to back the number of USDT tokens in circulation.
A further investigation by the Commodity Futures Trading Commission found that Tether only held enough dollar reserves for a quarter of the time between 2016 and 2018.
Tether recently published its latest attestation, conducted by auditing firm BDO Italia, in an attempt to reassure token holders of its liquidity.
Tether is the third-largest cryptocurrency by market capitalization behind and , with a market cap of $68 billion, according to CoinMarketCap.
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Source: Decrypt.co[mailpoet_form id="3"]
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