Tether scores final victory in USDT reserves lawsuit
The class-action lawsuit brought against Tether and Bitfinex has concluded following the plaintiff’s decision not to appeal the final court ruling. Tether, the stablecoin issuer, confirmed the resolution in a recent statement.
Shawn Dolifka and Matthew Anderson, the plaintiffs in the case, alleged that Tether’s claims about its stablecoin, USDT, being backed one-to-one by the U.S. dollar were misleading. However, their claims were dismissed by the U.S. District Court for the Southern District of New York earlier in August stating the lawsuit didn’t have strong enough claims of harm.
Anderson and Dolifka argued that Tether lacked sufficient reserves to align with the volume of USDT in circulation. Contrary to Tether’s assertion of reserves solely in U.S. dollars, they claimed that the reserves included over-collateralized loans and various other asset types. This assertion, according to them, devalued the stablecoin beyond what Tether purported.
In response, Tether countered the lawsuit’s argument by asserting that it lacked solid proof confirming a decrease in the value of USDT. Subsequently, the court sided with Tether, highlighting the lawsuit’s absence of factual substantiation for the claimed devaluation or harm.
The lawsuit, which accused Tether of misrepresenting the full backing of its stablecoin, reached its conclusion as the plaintiff opted not to pursue further legal action, respecting the court’s ruling.
“Quite unlike Dolifka’s ill-advised decision to file the action in the first place, his decision to forego his appeal rights was the correct decision. His claims were entirely meritless, and no amount of further litigation would have resulted in Dolifka or his attorneys realizing anything monetarily or otherwise. Here and moving forward, as we have said many times before, Tether and Bitfinex will never fall prey to shameless litigation money grabs,” Tether said in a blog post.
Despite the legal victory, a New York judge ordered Tether and its sister crypto exchange Bitfinex in 2022 to produce financial records relating to the backing of the world’s largest dollar-pegged stablecoin.
Bitfinex 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.”
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.”
