US Judge Dismisses Class Action Lawsuit Against Tether and Bitfinex – Chief Judge Laura Taylor Swain from the U.S. District Court for the Southern District of New York has finalized the rejection of a class action lawsuit targeting stablecoin issuer Tether and its affiliated crypto exchange Bitfinex. This decision comes two years after the plaintiff, Shawn Dolifka, initially took legal action against the companies. Dolifka has decided not to challenge the judge’s ruling after his motion to amend the class suit was denied.
In October 2021, Dolifka initiated a class action lawsuit against Tether, alleging that the company deceived customers about the characteristics of its stablecoin, USDT, and devised a scheme to entice users into purchasing the cryptocurrency. Teaming up with Matthew Anderson, Dolifka accused Tether of providing false information about USDT reserves, asserting that the company held cash reserves amounting to less than 4% of the circulating tokens.
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They contended that these reserves did not consist of U.S. dollars but were primarily composed of assets such as overcollateralized loans and undisclosed commercial paper. Furthermore, despite pledging transparency to customers, the company had not undergone any professional audits, according to the duo. Moreover, the legal action contended that USDT did not qualify as a stablecoin, contradicting Tether’s assertion of being backed 1:1 with the U.S. dollar.
The plaintiffs argued that Tether’s purported wrongdoing entitled them to compensatory and statutory damages, prejudgment and post-judgment interest, along with attorneys’ fees. Tether called the lawsuit nonsense and copycat in response, stating that the plaintiffs and law firm were looking for a payout based on “meritless claims.” The company’s CEO, Paulo Ardoino, said the class suit would bite the dust like others.
With Judge Taylor finalizing the dismissal of the lawsuit, Tether has reiterated its stance to never fall prey to “shameless litigation money grabs.” “Quite unlike Dolifka’s ill-advised decision to file the action in the first place, his decision to forego his appeal rights was the correct decision. His claims were entirely meritless, and no amount of further litigation would have resulted in Dolifka or his attorneys realizing anything monetarily or otherwise,” Tether added.