Tether Accused In New Class-Action Lawsuit Of Unlawful Practices

Tether accused in a new class-action lawsuit on deceptive practices made the stablecoin issuer respond and call the lawsuit nonsense and based on entirely meritless claims. Let’s find out more in today’s Tether news.

The leading stablecoin issuer Tether accused in a new class-action lawsuit alleging that the practices of the company were immoral, oppressive, and unethical according to the complaint that was filed to the district court of south NEw York. Plaintiffs Shawn Dolika and Matthew Anderson dispute Tether’s claim that the crypto is backed by 1:1 dollar reserves. This claim has so far been challenged twice in court and the current case references the company’s checkered legal history.

Tether was fast to point out that the claims are only shameless money grabs for which the lawsuit is a simple example that will never be dignified by paying one Satoshi in a settlement. One satoshi is the smallest unit of BTC and it is equal to $0.0004477. The company said it will litigate and dispense with the filing and then it will seek recompensation from Dolika and Anderson. The New York Attorney General Letitia James ordered Bitfinex and Tether to cease trading in New York and pay a fine of $18.5 million after state investigations concluded that Tether didn’t have enough reserves to back the USDT tokens in circulation.

The two companies this year got into more problems this year when the independent US derivatives regulator, the CFTC fined Tether $41 million and Bitfinex with $1.5 million. The CFTC alleged that Tether had sufficient fiat reserves in the accounts that are enough to back the number of Tether tokens in circulation for a quarter of the time over a 26-month period between 2016 and 2018. a few days after the fine, the CEO of Celsius Alex Mashinsky said that Tether issues its dollar-pegged crypto occasionally as a loan in exchange for BTC or ETH which contravenes the company’s principles of stablecoins. Mashinsky noted that the stablecoins issued are destroyed when repaid in order not to increase the circulating supply.

For Tether’s part, the company tried to be transparent and released an assurance report by Moore Cayman revealing that half of Tether’s reserves are in the form of a commercial paper and certificate of deposit while only 10% comes from cash and bank deposits.