The court has finalized the dismissal of a class action lawsuit filed against BitFinex and Tether after the plaintiffs in the case — Matthew Anderson and Shawn Dolifka — elected not to appeal the dismissal ruling, according to a Nov. 15 press release.
Tether and BitFinex issued a statement on the matter, saying the plaintiff’s decision to forgo an appeal was the “correct decision.”
BitFinex said:
“[Dolifka’s] claims were entirely meritless, and no amount of further litigation would have resulted in Dolifka or his attorneys realizing anything monetarily or otherwise.”
The companies added that they will continue to fight “shameless litigation money grabs.”
The lawsuit
The plaintiffs’ lawsuit accused the companies of misleading consumers about the properties of Tether’s stablecoin USDT and falsely disclosing information about its reserves.
Essentially, the lawsuit argued that the stablecoin was not backed 1:1 as the companies claimed. The plaintiffs, who purchased USDT in 2019, claimed they would not have done so had they known the representations were false.
However, Judge Laura Taylor Swain dismissed the complaint early in the proceedings after ruling that the plaintiffs had failed to provide sufficient evidence of actual reliance on the alleged false statements, a crucial element for breach of contract and unjust enrichment claims.
The court stated that the complaint lacked “plausible allegations of injury” as there was no evidence to show that “USDT had a diminished actual value at all.”
The plaintiffs were allowed to amend their complaints. Still, the revised arguments failed to address the defects in the complaint, paving the way for a complete dismissal in September after Judge Swain rejected the amended complaint.
Tether’s reserves
The reserves backing USDT have been a focal point of discussion among the crypto community, with some doubting the veracity of claims made by Tether and its parent company, BitFinex.
The companies have tried to quell these doubts by publishing comprehensive independent audit reports on the consolidated USDT reserves every quarter conducted by accounting firm BDO. The latest report was published on Sept. 30.
Based on Tether’s Transparency page on its website, 85.73% of the reserves backing USDT are held in cash and cash equivalents, with the vast majority held in U.S. Treasury bills.
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