iFinex Inc, the parent company of both Tether and Bitfinex has filed for a 30-day extension for the submission of key documents about Tether reserves and other financial operations in the ongoing lawsuit filed by NYAG.
Update letter for NYAG Tether case, ~30 more days of waiting everyone. See you around Valentine's day https://t.co/NgozuAMDVY
— Bennett Tomlin (@BennettTomlin) January 19, 2021
The lawsuit filed by NYAG alleges that both Bitfinex and Tether were involved in a misappropriation of $850 million funds. This led to a long-drawn court battle and accusations against the stablecoin issuer and the crypto exchange Bitfinex. iFinex’s legal counsel on January 19 filed a court document seeking a 30-day extension four days after the previous deadline was set for January 15.
The official court filing read,
“The parties will need a few more weeks to produce the supplemental information, for OAG to review the production, and to discuss further among themselves what if any further proceedings may be necessary.”
Bitfinex is accused of borrowing 850 million US dollars from Tether to cover its losses, however, when caught they said it was a loan from the stablecoin issuer. The proceedings of the lawsuits also asked for Tether’s audit report about their US Dollar reserves backing the circulating USDT in the market, something Tether has avoided all along despite claiming to be 100% backed. Tether quietly changed that claim back in 2019 from 100% to 74% of its USDT supply being backed by Dollar reserves while the rest it claims is backed by a diverse portfolio of assets that also involved bitcoin.
What’s the Tether & BitFinex FUD About?
As a stablecoin issuer Tether is liable to back the circulation supply of its token by an equal amount of USD reserves, however, Tether’s reluctance to get it’s reserved audited by a third party has raised many questions in the past. This obscurity around the reserve has also led to a Bitcoin FUD where many have claimed that Tether has pumped BTC price from time to time.
The FUD was inflated with an article doing the rounds about a possible connection between Tether’s USDT flow and BTC market price. Willy woo, a prominent bitcoin analyst debunked the claims.
— Willy Woo (@woonomic) January 17, 2021
The outcome of the lawsuit and especially when iFinex submits the key financial documents would play a key role in the crypto market especially at a time when the race for stablecoin dominance in the US market and crypto space is growing.