Stablecoins have been under fire since the collapse of Luna which proved that fiat-pegged tokens can be exploited and often work as Ponzi schemes. It is not the general rule of thumb, but it is something that we have to keep in mind when talking about using stablecoins that operate in a largely unregulated market.
Tether will be tested next during the court hearing of a lawsuit filed against FTX and Tether by plaintiffs claiming that crypto companies caused them $1.4 trillion in financial damages.
The US judge wants to see the books
Currently, the order states that the court requires general ledgers, balance sheets, income, cash flow, and profit/loss statements regarding any financial activities conducted by Tether. Records of transactions including time stamps must be provided as well. Tether will have to reveal its accounts on multiple crypto exchanges including Poloniex, Bittrex, and Bitfinex.
It seems that Tether, for obvious reasons, does not want to release these documents with their lawyers calling the order an overreach. However, the judge pointed their attention to the fact that these documents are incredibly important for the case in question and must be produced for him to make a correct decision regarding the plaintiffs’ claims. The judge also added that plaintiffs ask for reasonable proof that USDT is backed by a sufficient amount of US dollars.
Tether says that they produced the necessary documents to prove that they have sufficient backing, but it seems that they will have to produce more documents if they want to avoid another settlement.
The crypto industry needs transparency in Tether’s case
The uncertainty surrounding USDT is another reason for many doubters and officials to continue pressuring the market. The Tether’s situation is like a band-aid that we should tear off in a single swift move. Tether has been trying to avoid any scrutiny and even switched its bookkeepers, but it is not enough to present vague statements from auditors. They must present proof that USDT is sufficiently backed by the fiat currency it is pegged by.