The largest stablecoin operator, Tether, has been ordered by the United States District Court in New York to provide relevant documents on the backing of USDT, following the dismissal of Tether’s motion that blocked the release of its financial records.
Per the lawsuit claims dating back to 2019, Tether allegedly conspired with affiliated companies to employ unbacked USDT as part of a campaign to inflate the price of crypto's bellwether, Bitcoin.
The order requires Tether to tender “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements" including transaction records of trades or transfers of stablecoins and other cryptocurrencies by Tether, as well as the information on the timing of transactions.
Tether was also required to provide information about the accounts it holds on bitfinex, Poloniex and Bittrex. However, the attorneys representing Tether moved to block the order to release the required documents, labelling the plaintiff's request as “incredibly overboard” and “unduly burdensome”.
The presiding judge, Katherine Polk Failla dismissed this notion, stating that the documents the Plaintiffs seek are of utmost importance to ascertain the backing of USDT with US dollars. She further added,
"The documents sought in the transactions RFPs appear to go to one of the Plaintiffs' core allegations: that the Defendants engaged in crypto commodities transactions using unbacked USDT, and that those transactions "were strategically timed to inflate the market."
Much of the controversy around Tether arises from its history of providing minimal levels of transparency in the way of documentation, raising whispers and suspicion about its dollar reserves.
The outcome of the lawsuit, depending on the level of detail provided, could give investors access to appropriate data, to replace the conjecture and assumption about the claims that tether has been artificially driving up market prices using unbacked USDT.