The order is related to a lawsuit that is still going on. The lawsuit says that unbacked USDT issuances have hurt the market by $1.4 trillion.
Tether, has been told to show proof that USDT is backed by real money. The injunction is related to a case that is currently being pursued. The case says that the market has lost $1.4 trillion because of USDT issuances that were not backed by anything.
As part of a lawsuit that claims Tether worked with others to make the stablecoin as part of a plan to artificially raise the price of bitcoin, a judge in the United States District Court for the Southern District of New York has ordered Tether to show financial records about the backing of USDT (BTC).
The order requires Tether to produce “general ledgers, balance sheets, income statements, cash-flow statements, and profit-and-loss statements.” Also, Tether is required to show records of any trades or transfers it has made with cryptocurrency or other stablecoins, including information about when the trades happened.
It also tells Tether to share information about the accounts it has on Bitfinex, Poloniex, and Bittrex, which are all exchanges for cryptocurrencies. Although attorneys for Tether moved to block the order to release, calling it “incredibly overboard” and “unduly burdensome,” the judge presiding over the case did not agree and wrote that the “documents plaintiffs seek are undoubtedly important.” Tether’s attorneys had argued that the order was “incredibly overboard” and “unduly burdensome.”
According to what Judge Katherine Polk Failla said in her opinion, “The Plaintiffs clearly explain why they require this information: to assess the backing of USDT with US dollars.”
The judge went on to say that “the documents sought in the transactions RFPs appear to go to one of the Plaintiffs’ core allegations: that the Defendants engaged in cryptocurrency transactions using unbacked USDT,” and that those transactions “were strategically timed to inflate the market.” The judge added that “the transaction RFPs appear to seek documents that go to one of the plaintiffs’ core allegations.”
Concurrently, a case has been submitted to the Supreme Court of New York in an effort to compel the New York Attorney General to disclose the information that they have obtained throughout their investigation into Tether’s reserves.
CoinDesk is a participant in this legal proceeding. The New York Attorney General looked into Tether’s reserves, and in February 2021, they reached a settlement worth $18.5 million.