The proponents of the accusations against Tether and Bitfinex decide not to appeal the court’s decision to deny the class-action modification. Tether: ‘Claims were without merit.'”
Bitfinex and Tether breathe a sigh of relief. The accusations made by Matthew Anderson and Shawn Dolifka through a class action – claiming that the two companies had disseminated false information about the reserves held – had already been dismissed last August by Chief Judge of the United States District Court for the Southern District of New York, Laura Taylor.
After the judge denied a motion to modify the class action, Shawn Dolifka reportedly chose not to appeal the decision, as stated by Tether in a press release on November 15. The company’s CEO, Paolo Ardoino, commented on Twitter: ‘Today is a good day.'”
In the press release, the issuer of the world’s most capitalized stablecoin commented:
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.
Disputes on USDT reserves
The case revolved around statements concerning the stablecoin USDT from Tether, with the plaintiffs claiming that the company’s representations about its reserves were false. Essentially, the lawsuit claimed that the stablecoin was not backed 1:1 as stated by the companies.
The judge’s verdict
However, the judge Laura Taylor Swain dismissed the complaint in the early stages of the trial, stating that the plaintiffs had not provided sufficient evidence of actual dependence on the alleged false statements. The court stated that the complaint lacked “plausible allegations of injury” as there was no evidence to support the claim that “USDT had actually diminished in value”. Nevertheless, the plaintiffs had the opportunity to amend their complaints.
Doubts about the validity of reserves
The reserves of Tether, which back the USDT, have stirred discussions within the crypto community, with some questioning the validity of Tether’s and its affiliate, Bitfinex’s claims. In this regard, the companies have sought to quell such doubts by publishing independent audit reports every quarter on the consolidated reserves of USDT, conducted by the accounting firm BDO. The latest report was published on September 30th.
According to the Transparency page on Tether’s website, 85.73% of the reserves backing USDT are held in cash and cash equivalents, with the large majority held in US government bonds.
