Tether, Bitfinex ordered to show financial documents over USDT stablecoin

On Tuesday, a New York judge ordered Tether and Bitfinex to produce documents showing the backing of the USDT stablecoin.
The order comes as part of a three-year-old class action lawsuit from a group of investors against stablecoin issuer Tether Limited and its sister crypto exchange Bitfinex. The lawsuit alleged the two firms used the USDT stablecoin to manipulate crypto markets and falsely misrepresented USDT’s backing. Tether and Bitfinex denies the allegations.
The lawsuit (case number 1:19-cv-09236-KPF) was filed in the US District Court of the Southern District of New York in October 2019 by plaintiffs David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz and Pinchas Goldshtein.
Three years into the legal case, Judge Katherine Polk Failla has allowed the plaintiffs’ “Requests for Production" (“RFPs”), ordering Tether and Bitfinex to produce financial records and transaction records for all trades or transfers of stablecoins or other cryptocurrencies. In the order, the judge stated that “the documents plaintiffs seek are undoubtedly important, as they relate to the backing of USDT.” 
The requested documents include all “general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements” maintained by the firms. Furthermore, the defendants have been asked to hand over details of their crypto accounts on exchanges, including Bitfinex, Poloniex and Bittrex. These records are being requested as part of the discovery process, a procedure where each party collects evidence to make their case. 
Meanwhile, the legal firm Debevoise & Plimpton, which represents Tether and Bitfinex, had requested that the court denies the plaintiff's request in a previous letter addressed to the judge, claiming the “plaintiffs failed to timely raise this dispute.”
Tether’s stablecoin woes
USDT is the largest stablecoin in the crypto market and is pegged to the U.S. dollar at a 1:1 ratio. It leads the stablecoin market by trading volume and acts as one of the top base-pair currencies across various large crypto exchanges.
Over the years, Tether has been accused many times that its stablecoin is not backed by dollar reserves to justify its market cap of nearly $68 billion, a claim that Tether has publicly denied. Tether’s latest public attestation claims the stablecoin is fully backed with cash and bank deposits, various short-term deposits, and US Treasury bills.
In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. In its prior investigation, NYAG alleged that Tether was conducting “illegal activities” in the state of New York.