US judge demands that Tether prove reserves

During a lawsuit between the publisher of the largest stablecoin, Tether (USDT), and American crypto exchange Bitfinex, the judge has made a special ruling. Judge Katherine Polk Failla says that Tether is obliged to disclose their reserves publicly. Tether’s reserves have been the subject of heated debate for some time.

Tether and their reserves

A stablecoin is a cryptocurrency whose value is linked to another currency. In the case of Tether, that is, of course, the US dollar. To ensure that link, Tether ideally has a reserve that consists of dollars 1-to-1. However, the question is whether that is really the case. Tether has so far refused to disclose their reserves.

New York District Court Judge Failla approved the plaintiffs’ request, Bitfinex, to hand over all of Tether’s financial documents. Tether obviously did not want this, but the objections of the stablecoin issuer have not been accepted by the court.

Under the judge’s order, Tether will be required to present “ledgers, balance sheets, profit and loss statements, (…) such as those related to USDT support (financial accounting RFPs and crypto-commodity transactions).

In addition, Tether will be required to share all data about transactions or transfers of cryptocurrencies or other stablecoins by itself. Tether will also have to provide all details about the accounts they hold at crypto exchanges Bitfinex, Bittrex and Poloniex.

Judge doesn’t agree with Tether

The judge gave the vfollowing arguments to oblige Tether to do so:

“Prosecutors clearly explain why they need this information: to assess USDT’s coverage with US dollars. […] The documents requested in the RFPs for transactions appear to relate to one of the plaintiffs’ key allegations: that the B/T Defendants engaged in cyptocommodity transactions using unsecured USDT, and that those transactions ” were strategically timed to blow up the market.”

Whether this is bad news for Tether must of course first be apparent from the documents that they are required to submit. Yet it is at least special that Tether would have liked to keep the relevant documents hidden. To be continued.

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