Tether: The biggest stable coin by market cap will be having a critical turning point. Tether case: The famous case of NYAG (New York Attorney General) vs iFinex. This case has been ongoing since April 2019 and has an important date on 15th of January 2020. By this date, iFinex has to submit all supporting documents for the minting of Tether to the NYAG.
Tether v/s NYAG
In April 2019, NYAG started investigating iFinex the parent company of both Tether and the leading cryptocurrency exchange Bitfinex. Bitfinex had lost approximately $850 million dollars’ worth of cryptocurrency in the infamous exchange hack. NYAG claims that iFinex started minting Tether to cover up the losses. This tether was not equally backed by USD or any other collateral . Every Tether that is minted should be backed. This backing can be by an equivalent amount of USD or collateral. Same is the case for all other custodial stable coins.
After NYAG filed a case, iFinex moved to Judge Joel Cohen in May 2019 stating that these claims were baseless. They proposed to dimiss the case. After hearing the claims by both parties, Judge Joel Cohen granted a temporary stay on NYAG’s request for documents from iFinex. Judge also extended the injunction date by 90 days as he did not have substantial evidence from both parties to conclude if the case should be moved forward or dismissed.
In August 2019, NYAG presented fresh evidence claiming that apart from the printing of Tether without equivalent USD, Bitfinex also violated the exchange policies. They served US customers after the deadline to stop serving US customers.
Bitfinex IEO LEO Issue
NYAG decided to go after iFinex with full force and filed another case. They reported issues with that the funds raised by Bitfinex by the sale of their token UNUS SED LEO. They claimed that LEO is not a cryptocurrency token but a Security.
Deadline to turn in documents:
Looking at all the proof submitted by NYAG, Judge Cohen asked iFinex to submit all the documents related to the financial transactions of Tether and Bitfinex to NYAG by 90 days. Due to a motion filed by the Attorney General on 9th December the date to handover all financial transaction documents was extended to 15th January 2021.
What will happen on 15th January 2021?
iFinex has to submit all the documents asked by NYAG so that they can continue the further investigation of the case. iFinex has to provide a complete account of every single Tether that has been produced. Tether claims that it has USD reserves, Bitcoin reserves and loans to back the 24 billion Tethers that have been printed.
Depending on the documents that are submitted by Tether, we will get to know if a huge crash is expected in the market. Many crypto exchanges rely on Tether for their derivatives services. The daily volume of Tether is higher than most cryptocurrencies and at majority instances is higher than BTC as well. If iFinex fails to provide all the proof which they claim to have it would be extremely bearish news. This event could turn out to be one of the most influential fundamental news crashing the whole crypto market.