Don’t get Excited about Court’s Show Cause Order in Bitfinex-Tether Case

According to the latest revelations, as of April 30, the USDT stablecoin is only about 74 percent backed by fiat equivalent, stated issuer’s general counsel.

On Tuesday, Tether’s general counsel Stuart Hoegner wrote in an affidavit that the company behind USDT holds about $2.1 billion in cash and short-term securities. Hoegner is also the general counsel to the crypto exchange Bitfinex which shares the owners and executives with Tether.

Under the subheading “Tether Holders Are Not At Risk,” it has been confirmed that the stablecoin is no longer 100 percent backed by cash or liquid assets.

“As of the date [April 30] I am signing this affidavit, Tether has cash and cash equivalents (short term securities) on hand totaling approximately $2.1 billion, representing approximately 74 percent of the current outstanding tethers.”

Meanwhile, there are about 2.8 billion USDT tokens issued by Tether.

Zoe Phillips of law firm Morgan Lewis who is also representing Tether wrote in a memorandum of law that Tether does not need to hold $1 for every USDT issued.

“The Attorney General appears to believe that Tether must hold $1 in cash fiat currency for every dollar of tether. These allegations are wrong on multiple levels,” she wrote.

The two companies have been in the middle of the allegations made by the New York Attorney General on April 26th claiming Bitfinex borrowed over $600 million from Tether after losing about $850 million to a currency converter.

Hoegner in response has filed an affidavit in support of Order to Show Cause to vacate or modify or stay the ex parte order of NYAG filed last week, that would compel Tether and Bitfinex to produce certain documents by May 3rd.

Later on Tuesday, New York Supreme Court Justice Cohen ordered the NYAG’s office to present to the court why the initial ex parte order of the attorney general should not be canceled or modified to allow the employees of Tether and Bitfinex to access the line of credit offered by Tether to Bitfinex. The NYAG is required to submit a response with reasoning by May 6, that is next week.

However, Jake Chervinsky, a securities litigation lawyer at Kobre and Kim who shares his insight into the legal aspects of cryptocurrencies on Twitter says, this show cause order is required by the law and is nothing to be excited about.

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide