Tether: ‘Unlawful and Deceptive’

The story of Tether continues as it sees itself back in court over another lawsuit. It seems every week there is another legal issue for Tether who continues to push back against the negativity. This week, a group has filed a complaint to the southern district court of New York with a class-action lawsuit against the stablecoin.

When it comes to regulations, Stablecoins have been a hot topic this year. Tether is one of the largest stablecoins and has always raised many eyebrows. With almost 69 billion tokens in circulation and no real audit into the backing of these funds, many regulatory figures are concerned over the effect it can have on both cryptocurrency and traditional currencies.

Each time Tether is taken to court or approached by a government financial institution, it seems to narrowly escape being shut down. 

This class-action lawsuit is another one claiming that Tether does not have the financial backing for each token in circulation. This is the second time this year that Tether has gone to court over this issue. It responded on Monday saying this was just another legal money grab and that it would come down hard on the lawyers. 

Tether had promised earlier this year to be more transparent. The company went into more detail about how it prints tokens and how some are used for loans for exchanges. However, a large focus was on how they are burned once repaid, (as to not raise the circulating supply).

They were recently fined by the Commodity Futures Trading Commission for $41m for not having proper backing for its token for at least one-quarter of the time during a two-year period. 

There are other stablecoins on the market which have also grown rapidly that could be looked at closer by governments soon. There are currently 164 billion stable coins in circulation in the cryptocurrency markets. Many of these stablecoins are said to have a 1:1 backing with fiat but lots have gone unchecked.

This is one of the reasons politicians continue to push the rhetoric that stablecoins could upset our financial systems.

With the growth of central bank digital currencies, several people wonder if the end of stablecoins is near. If there is an option with the exchange to swap to a digital version of your local currency it could be a better choice than to use a stablecoin with questionable backing.

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Written by Tudor

Works as a developer and helps keeps the digital cogs turning. Leave them alone, they're busy.

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