On August 4, the U.S. District Court for the Southern District Of New York, presided over by Chief Judge Laura Taylor Swain, dismissed a class-action lawsuit against Tether and Bitfinex. The suit, initiated by plaintiffs Matthew Anderson and Shawn Dolifka in December 2021, challenged the USDT stablecoin’s backing. Following an intense deliberation, the court declared the case meritless.
Judge Swain’s six-page decision concluded that the plaintiffs’ allegations lacked plausibility due to the absence of evidence demonstrating that the value of USDT had diminished. Thus, in the early stages of the proceedings, the court’s decision to dismiss the entire class action complaint highlighted the groundlessness of the plaintiffs’ claims.
In response to the court’s ruling, Tether reiterated its commitment to its customers and the broader community, ensuring continued protection and service delivery.
Grounds for dismissal: Plaintiffs’ failure to demonstrate injury
The lawsuit’s basis lay in the plaintiff’s concerns about USDT’s backing. Drawing on findings from the New York Attorney General (NYAG) and the Commodities Futures Trading Commission (CFTC), and Tether’s own statements regarding its reserve constitution, the plaintiffs had alleged that the stablecoin’s claims were false.
However, the lawsuit faltered as the plaintiffs could not present any substantial price fluctuations in the USDT that could have influenced their investment’s value. Instead, they argued that their decision to purchase USDT would have been different if they had prior knowledge of the nature of USDT’s reserves.
Their legal pursuit sought financial compensation and injunctions that would compel Tether to reveal that USDT reserves are not wholly backed by the U.S. dollar at a 1:1 ratio, preventing it from misrepresenting its reserve composition. The court, however, found these assertions void of legal standing.
Tether’s legal victory amid the profitable second quarter
This legal victory for Tether and Bitfinex is indeed noteworthy. It further reinforces the companies’ commitment to maintaining their promise to the crypto community. Amid the legal wrangling, Tether, ranked as the world’s eleventh-largest holder of Bitcoin, has reported a substantial net profit of $850 million for the second quarter. Consequently, the court’s ruling could mark a new chapter for Tether and Bitfinex, paving the way for continued growth in the crypto industry.