One more on the counter – Tether (USDT) hasn’t finished hearing USDT users complain about the controversial nature of the assets in the reserves backing its stablecoin. The company is losing its temper in the face of two new plaintiffs.
Tether and its reserves: complaints and threats around stablecoin reserves
Tether has to face a new class action. Two American citizens, Matthew Anderson and Shawn Dolika, indeed filed a complaint on December 10, 2021, in the district court of southern New York. They represent a group of stablecoin users.
The complainants blame Tether for having lied about the reserves guaranteeing his stablecoin, claiming that the latter was backed 100% by US dollars. The complaint is aggressive, it states that Tether’s practices are “immoral, unethical, oppressive and unscrupulous.”
The document further states that “the plaintiffs and class members would not have purchased or paid much less for the Tether tokens if they had known that these statements were false.”
It may be the complaint too much for Tether who reacted on December 13, 2021, accusing the complainants in turn to want to extract money from society “On the basis of completely unfounded complaints”. Tether said he would also “aggressively sue and get rid of” that complaint. The company further indicates that it will seek redress from Anderson and Dolika.
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Fine to Fine: Aggressive Tether to Stop Bleeding?
Tether shows its fangs, but is society too innocent that she tries to let it appear ? It will be recalled that the company did not reveal for the first time the composition of the reserves guaranteeing its stablecoin until 2021, while the USDT was launched in 2014.
These reserves were made up of 3.87% cash, the rest being various assets such as fiduciary deposits, commercial papers, etc. This late transparency shows that the reality of guarantees is far from the image of a tether backed 100% by the US dollar.
Tether has already had to put his hand in his pocket in 2021, to pay fines imposed by the authorities. New York City Attorney General Letitia James ordered Tether and the Bitfinex cryptocurrency exchange to pay $ 18.5 million. The conclusion of the State’s inquiries had indeed shown that Tether did not have sufficient reserves to guarantee the amount of USDT in circulation. Tether and Bitfinex share common shareholders and management.
And repeated twice! The Commodity futures trading commission also fined Tether $ 41 million in October 2021. The Commission also maintains that the fiat currency reserves held by Tether were insufficient to guarantee the number of USDTs in circulation over a 26-month period between 2016 and 2018.
Faced with these facts, how then can we interpret Tether’s aggressive reaction to the complaint filed by Anderson and Dolika? Is the company really convinced of the validity of this position which it has decided to adopt, or is that all simply a strategy to deter further class actions that cost him dearly in the future ?
The days of the wild west, where opacity and the total lack of regulation reigned, are over for stablecoins. The latter have an interest in walking straight to avoid attracting the lightning of regulators who wish to regulate them.
Tether’s legal issues also show a maturing cryptosphere, with crypto projects increasingly being held accountable to authorities, reducing the risk of possible abuses. Would you like to be one of the people who joined the crypto revolution early enough? Register without delay on the benchmark crypto exchange platform FTX and benefit from a lifetime reduction on your trading fees (affiliate link, see conditions on the official website).