Business

Noah Bradley

Tether keeps on minting as legal woes pile up

Tether doesn’t seem to be too concerned about a recent lawsuit that threatens to rock the company at its foundation. Looking at the possibility of having to defend itself against a class-action lawsuit that seeks upwards of $1.4 trillion, the company continues to carry out the very activity that brought the suit to the surface in the first place. Meanwhile, its close partner, the cryptocurrency exchange Bitfinex, is trying a new tact in order to not have to reveal documents in a separate lawsuit brought against the two companies by the attorney general of New York.

The lawsuit against Tether claims that the company has repeatedly minted USDT tokens in order to manipulate the crypto market. As news of the lawsuit surfaced, Tether did it again, minting two transactions worth 12 million and 20 million USDT. Those transactions coincided with a slight rally in the market and were similarly conducted to several that occurred this past July when another rally happened. In both instances, the assertion has been that Tether is attempting to deflect attention away from its legal issues by causing prices to increase, allowing the focus to shift to crypto values and away from the two companies.

If Tether thought that it could switch from minting hundreds of millions of USDT to just millions of the tokens and avoid attention, it was wrong. The company is now under the crypto microscope and any activity is going to cause someone to notice. With new tokens being launched on the Ethereum blockchain, they are automatically picked up by leading exchanges and this has an immediate impact on market prices.

Bitfinex is once again trying to find a way out of presenting documents related to a $900-million loan it received from Tether. The New York Attorney General’s office has been going after the two companies for several months now, arguing that they are illegally offering services to U.S.-based customers, and Bitfinex and Tether continue to try to find some way to block Attorney General (AG) Letitia James.

In its latest attempt, Bitfinex once again asserts that the state has no jurisdiction and believes that having to turn over the documents related to the loan would be too cumbersome. Lawyers for the companies sent a letter to the court, stating, “[Office of the Attorney General’s] allegations concerning delay are in all events misleading, and unfairly attack the motives of the Respondents and their counsel.”

AG James believes that Bitfinex received the money in order to cover up a loss of $850 million the exchange incurred when the money was “lost” by a payment processor. Since this past May, the AG has been fighting Tether and Bitfinex, trying to get to the bottom of what actually transpired, but the companies haven’t been forthcoming with details.

The case is expected to continue next January, and Bitfinex is trying to find ways to stall again. The letter presented by the lawyers this week indicate that the company would be willing to present the documents if it were given a 90-day extension, adding that the extra time would prove beneficial to Tether holders. It explained, “Even if a decision issues immediately, a further period of 90 days under the injunction will take us to April 2020 – a full year from when the injunction first issued. This is by any measure an excessively long period of time, and certainly more than enough time for tether holders to decide in full view of the facts whether they would like to continue holding their tethers or to redeem.”

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