The issuer of the stablecoin leader USDT – Tether – faces yet another class-action lawsuit with familiar accusations.
Lawsuit Against Tether
According to the official document, the two plaintiffs, Matthew Anderson and Shawn Dolifka in the US District Court for the Southern District of New York, accused Tether of misleading the consumers regarding the attributes of USDT tokens. More precisely, they outlined the sufficiency of USDT reserves, and what those reserves contain.
The class-action lawsuit also accused Tether of “unlawful and deceptive misrepresentations.” It went on to allege that USDT is not exactly a stablecoin, nor is it backed one-to-one with the US Dollar.
The lawsuit also accused Tether of maintaining less than 4% in cash reserves and not undergoing a
single professional audit despite promising transparency to its consumers. It also claimed that the stablecoin entity breached the contract, which qualifies the plaintiffs and members for “compensatory and consequential damages.”
Tether Hits Back
Following the latest development, Paulo Ardoino, the Chief Technology Officer of Bitfinex and Tether, said that “another lawsuit will bite to dust.”
Tether, on the other hand, lashed out and deemed the lawsuit “nonsense” and “a copycat” that was filed by two plaintiffs and their law firm looking to churn out massive payout on “meritless claims.”
Describing the lawsuit as a textbook example of “shameless money grabs,” the company vowed to “aggressively litigate and dispense with the action in due course, and then pursue their remedies against the filing parties.”
This isn’t the first time Tether has found itself in a similar position. In 2019 NYAG Letitia James revealed investigating Bitfinex. This was when Tether came into regulatory scrutiny. It was one of the closely watched cases in the cryptocurrency industry and involved an alleged $850 million cover-ups for a loss.
After a 22-month long inquiry, the company was able to settle the case with New York state. The court fined the firm $18.5 million and prohibited it from conducting business in New York under the terms of the settlement agreement.
Tether has often been indicted for mismanagement of its funds and misleading users about its USDT reserves. Earlier in September this year, the United States District Court for the Southern District of New York dismissed half of the class action plaintiffs’ claims against the issuing company behind USDT tokens and its affiliate cryptocurrency exchange Bitfinex.
The plaintiff’s, consisting of five crypto traders, alleged Tether of being deceptive, market manipulative, and anti-competitive, which resulted in financial losses after purchasing the tokens at inflated prices in 2017.