Tether Told to Reveal Financial Details

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  • Tether has been told to reveal in-depth financial dealings as part of a lawsuit
  • The stablecoin issuer is being sued by a collection of traders who accuse it and Bitfinex of market manipulation
  • Tether tried to stop the order but then insisted it had planned to release the documents anyway

Tether will have to provide an in-depth report of its finances as part of a class action lawsuit against itself and some exchanges relating to manipulation of the crypto market. The order requires Tether to produce “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements” as well as records of any trades or transfers of cryptocurrency or other stablecoins by Tether including information about the timing of those trades. Tether had tried to complain that the request was “unduly burdensome”, but the judge disagreed, meaning Tether has to produce them.

$1.4 Trillion Market Manipulation Case

The case itself dates back to October 2019 when a group of traders claimed that crypto exchange Bitfinex and its sister company Tether manipulated the crypto market, harming traders and benefiting themselves. The suit accuses them of engaging in deceptive, anti-competitive and market-manipulating practices, resulting in economic damages for the plaintiffs to the tune of $1.4 trillion.

The arguments are broadly in line with the case brought by the New York Attorney General’s office in April 2019 which alleged that billions in USDT was minted and used to purchase bitcoin to inflate the crypto market, spurring the 2017-2018 bull market and subsequent bust. In the traders’ complaint, they further this claim that Bitfinex and Tether “shared false information about USDT being backed 1:1 by U.S. dollars”.

Follow the Money

Quite understandably, the plaintiffs want detailed information on Tether’s money flows, but Tether’s representatives tried to argue that the request was “untimely and unreasonable” and that producing such information was “ incredibly overbroad, unduly burdensome and untailored to the parties’ claims and defenses in this action”.

The judge disagreed however, stating that the documents being sought “appear to go to one of Plaintiffs’ core allegations: that the B/T Defendants engaged in cyptocommodities transactions using unbacked USDT, and that those transactions “were strategically timed to inflate the market.””

The motion also orders Tether to share details about the accounts it holds at crypto exchanges Bitfinex, Poloniex and Bittrex.

Tether Says ‘We Were Going to Do it Anyway’

Despite trying to fight the motion, Tether quickly issued a statement to say that, actually, it wasn’t a big deal after all, calling it “a routine discovery order”, and trying to claim that they had planned to hand over the documents anyway:

We had already agreed to produce documents sufficient to establish the reserves backing USDT, and this dispute merely concerned the scope of documents to be produced.

Of course, if this were true then they wouldn’t have tried to fight it, but when it comes to Tether, when is anything really transparent?