Tether and Bitfinex ordered to produce critical documents about USDT reserves

abdelaziz Fathi

A US judge in New York has ordered Tether and its sister crypto exchange Bitfinex to produce financial records relating to the backing of the world’s largest dollar-pegged stablecoin, USDT.

Tether

The move is part of a lawsuit that was filled in the New York federal court in 2019, seeking more than $1.4 trillion in damages for alleged manipulation of the Bitcoin market.

Bitfinex has already filed a motion to dismiss a lawsuit over allegations of market manipulation, labeling it “frivolous,” also claiming that the “plaintiffs failed to timely raise this dispute.” However, Judge Katherine Polk Failla has accepted the plaintiffs’ “Requests for Production” and said “the documents plaintiffs seek are undoubtedly important, as they relate to the backing of USDT.”

“The documents sought in the transactions RFPs appear to go to one of the Plaintiffs’ core allegations: that the Defendants engaged in cyptocommodities transactions using unbacked USDT, and that those transactions “were strategically timed to inflate the market,” the judge continued.

A class-action lawsuit has been filed against Bitfinex, Tether, and others accusing them of fraudulently inflating the cryptocurrency market by printing uncovered USDT tokens. The plaintiffs describe the alleged sophisticated scheme as “the biggest bubble in human history.”

However, as it stands, Bitfinex requests that the entire proceeding be dismissed as the frivolous suit lacks a factual or legal basis, and as such, has little or no chance of being won. The stablecoin printer said plaintiffs’ causes of action has no legal basis to proceed past the very early stage of the case.

Tether and its affiliate cryptocurrency exchange explained that the accusations largely rely on a concentrated campaign of price manipulation based on an unpublished study on bitcoin’s 2017 boom. Aside from key methodological flaws in the paper, Bitfinex continues, meritless claims were amended to “walk back support for a core allegation of the plaintiffs’ complaint.”

The paper by John Griffin, an academic with a history of spotting fraud in financial markets, and Amin Shams, a graduate student, found that at least half of the increase in the price of Bitcoin and other big cryptocurrencies at the time was attributable to “one large player.”

While the authors suggest those running Bitfinex either knew or even assisted the scheme, the exchange wonders how its flows of tethers manipulated a market that is more than seven hundred times bigger than the amount of total USDTs in circulation.

Should the decision wouldn’t go Bitfinex’s way, it would have to admit or deny the allegations and then undergo a lengthy, expensive process during which it should prove that Bitcoin’s skyrocketing gain wasn’t caused by shady activities on its platform.

Bitfinex executives have denied in the past that the exchange was involved in any manipulation and that Tether issuances cannot be used to prop up the price of Bitcoin or any other coin.

Read this next

Market News

Stock Market Analysis: Is NVDA Losing Its Leadership?

Since the beginning of the week, the S&P 500 Index (US500) has seen a modest increase of about 0.58%, whereas NVDA’s share price has experienced a decline of approximately 3.8%. This recent divergence raises concerns among Nvidia stock investors — could it signify a loss of NVDA’s market leadership?

Industry News

ESG: Australian regulator wins first greenwashing court case against Vanguard

Vanguard admitted that a notable portion of the securities within both the Index and the Fund did not undergo the promised ESG scrutiny.

Fintech, Uncategorized

BitMEX integrates HALO from Solidus Labs for cross-market surveillance

““The recent approval of the Spot Bitcoin ETF has piqued the market’s interest. As a result of price volatility, the trading volumes for crypto derivatives have gone up substantially. HALO, with its advanced technology and crypto-native detection architecture, will enable BitMEX to smoothly and safely scale trade surveillance across its increased trading volumes and provide the necessary safeguards for new product launches.”

Reviews

IUX Broker Review

IUX, recently rebranded from IUX Markets, stands as a multi-asset Forex broker recognized for its regulatory compliance across various jurisdictions.

Industry News

Horizon Software rebrands to Horizon Trading Solutions

“Horizon Trading Solutions has seen accelerated global growth over the past year to meet the rising demand for our trading solutions and built-for-purpose technology offering. The choice to rebrand represents a key part of this development, while maintaining our heritage and history in the industry.”

Market News

USDJPY has surged to levels last witnessed in 2022. Should we consider opening a short position?

The recent resurgence of the US dollar has propelled USD/JPY to new heights, touching levels not seen since 2022. This surge comes against the backdrop of stable short-term yields and ongoing economic data that fails to signal a significant slowdown, prompting questions about the extent of current monetary easing measures.

Digital Assets

DED Trends on Twitter After Memecoin Snapshot Announcement

Polkadot-backed community coin #DED, made it to the trending charts on X, demonstrating community’s engagement and interest behind the memecoin. 

Digital Assets

BlockDAG Presale Nears $10 Million Amid Toncoin’s Momentum, Green Bitcoin’s Presale, and the Rise of Other Top Cryptos

This article will examine three top trending topics: Toncoin’s potential, Green Bitcoin’s innovative presale, and BlockDAG’s sustainable mining approach. These cryptocurrencies take centre stage for their uniqueness and innovation.

Digital Assets

Coinbase scores minor victory vs SEC, but lawsuit to proceed

A federal judge in Manhattan, U.S. District Judge Katherine Polk Failla, ruled on Wednesday that the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Coinbase can largely proceed.

<