A recent discovery unmasked a claim that refers to the issuance of unbacked USDT by Tether. This unbacked currency circulating in the market has caused turbulence and damage of $1.4 trillion. A NY judge Katherine Polk Failla has asked this stablecoin issuer to disclose financial records to nullify this claim.
Tether is the third largest cryptocurrency, following Bitcoin and Ethereum. However, it has been plunged into severe accusations by crypto traders. While responding to this claim, Tether called it a “routine discovery.” Moreover, it asserted that these allegations are not strong enough to support the plaintiff’s meritless claims.
Tether to bring financial records to nullify the alleged claim
Upon the NY judge’s request, Tether has to bring substantial records to prove its stance. The order requires them to submit balance sheets, general ledgers, cash-flow statements, income statements, and profit and loss statements. Moreover, this should include details about cryptocurrency trading and the timing of the trade.
The company should also bring records showing its association with other crypto exchanges, such as Poloniex and Bittrex. When the attorney representing Tether called these claims “unduly burdensome,” the judge called it “undoubtedly important.” According to the court, these financial records will assess the USDT backing. However, The company claims that this record is entirely confidential, and its disclosure can damage its business.
How does this begin?
Back in 2021, this began when different crypto traders accused Tether of bringing unbacked cryptocurrency into the market. Several traders showed their deep concerns in this regard when Tether bought a large amount of Bitcoin, upsetting the entire balance. It tried to purchase Bitcoins in bulk by using unbacked USDT. Consequently, it caused a hike in the Bitcoin price. This turbulence upset the crypto market balance, severely impacting the traders.
A report was published in 2018 indicating that a player on the Bitfinex exchange had purchased many Bitcoins, resulting in a rebounding price. However, research performed by a professor at the University of Queensland referred to this event as ‘statistically insignificant.’
Another significant event occurred last year when the New York Attorney General restricted the activity of Bitfinex. It occurred as the company didn’t have enough funds to back its USDT circulating in the market. This investigation concluded with a pointing finger showing unbacked USDT. However, they clarified this situation by saying it has agreed to produce substantial evidence to nullify the false claim related to unbacked USDT. Crypto company has complete confidence in what it presents in front of the Court.
Claiming it to be a routine discovery, it is eager to fight back against this claim. The company looks forward to vanquishing this baseless claim as the third largest cryptocurrency in the market. However, it has certain apprehensions that court-requested documents can jeopardize its business.
The case has reached a turning point where the approaching verdict will decide the fate of the Tether. It can lose its position of being the third largest cryptocurrency. It is a big accusation for the stablecoin issuer Tether. However, the biggest manipulator of the crypto market is yet to be decided.