Tether declared a legal victory on Aug. 4 as it reported that a class action suit concerning its USDT stablecoin had been dismissed in court.
The case began in December 2021 when plaintiffs Matthew Anderson and Shawn Dolifka made allegations about USDT’s backing. This was based on findings from the New York Attorney General (NYAG) and the Commodities Futures Trading Commission (CFTC) as well as Tether’s own varying statements about its reserve makeup.
Tether said that the U.S. District Court for the Southern District Of New York has now deemed the case meritless. The court found the plaintiffs lacked plausible allegations of injury as they failed to establish that USDT had diminished in value.
Tether said that a dismissal at such an early stage of legal proceedings underscored the absence of viable legal allegations brought up by the plaintiffs.
In the wake of the legal victory, representatives from Tether and Bitfinex have reaffirmed their commitment to customer protection and continued services. Company members said they “remain laser focused” on maintaining their promise to the community.
Plaintiffs failed to show injury
In their original filing, the plaintiffs did not describe any price fluctuations in the price of USDT that may have affected the value of their investment.
Tether later argued that to establish injury, the plaintiffs must show a decrease in the value of USDT. A case based on the value of USDT is seemingly not viable, as the stablecoin has largely maintained its $1.00 price peg despite minor changes.
Instead of pursuing this line of argument, the plaintiffs asserted that Tether’s insistence on demonstrating injury through a decrease in USDT value was not correct, citing precedents from other legal cases.
Rather, the plaintiffs said they would not have purchased USDT, or would have purchased less USDT, if they had known about the nature of USDT’s reserves.
The plaintiffs originally sought financial compensation. They also sought injunctions that would force Tether to issue a disclosure stating that USDT reserves are not fully backed by the U.S. dollar at a 1:1 ratio and stop misrepresenting its reserve makeup.
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