Laura Swain, the Chief Judge of the U.S. District Court for the Southern District Of New York, has dismissed a class action lawsuit against USDT issuer Tether and its sister company Bitfinex.
The lawsuit was brought on by plaintiffs who alleged Tether was falsely advertising its USDT stablecoin.
The ruling is being seen as a significant win for the two entities and was announced in a blog post published on Tether’s official website. The post stated that the Chief Judge delivered a comprehensive and incisive 6-page decision, including an order to dismiss the class action lawsuit against the two entities, adding that it lacked merit. The post stated,
“Today, Chief Judge Laura Taylor Swain of the U.S. District Court for the Southern District Of New York issued a comprehensive and incisive 6-page decision that included an order dismissing the meritless class action lawsuit filed by Matthew Anderson and Shawn Dolifka against Tether and Bitfinex companies in its entirety.”
The lawsuit was brought on by plaintiffs Shawn Dolifka and Matthew Anderson. The plaintiffs claimed that Tether had falsely advertised its USDT stablecoin being backed in a 1:1 ratio by the U.S. dollar. However, the court did not buy their argument. Tether added that the fact that the entirety of the lawsuit was dismissed at such an early stage showed that the allegation against it and Bitfinex were devoid of any merit.
The verdict sparked a wave of reactions from the crypto ecosystem. Paolo Ardoino, Tether, and Bitfinex CTO took to X (formerly Twitter) and expressed his satisfaction with the ruling.
“Tether and Bitfinex Win Comprehensive Legal Victory as U.S. District Court Dismisses Class Action Lawsuit The Court correctly held that the plaintiffs’ complaint lacked any “plausible allegations of injury” because it includes no facts showing that “USDT had a diminished actual value at all.”
Prominent Bitcoin lawyer Stuart Hoegner applauded the Tether team’s efforts and broke down the court ruling in a long thread on X.
The Court RulingThe court gave several reasons for throwing out the lawsuit. It stated that the plaintiffs had not provided sufficient facts in the case nor mentioned the buying or selling price of USDT for the plaintiffs. The court further added that market data showed that USDT still maintains its peg with the USD at $1, and even if there were misrepresentations from the defendant’s side, there was no evidence that showed USDT had lost its value.
The Complaint In QuestionThe case stems from a complaint filed in 2021 when the plaintiffs, Shawn Dolifika and Matthew Anderson, claimed that Tether’s statement that its USDT was backed by the U.S. dollar in a 1:1 peg was false. According to the complaint, Tether and Bitfinex did not maintain adequate reserves for the USDT in circulation. Furthermore, the complaint also alleged that the reserves did not contain USD as advertised but were a mix of assets such as overcollateralized loans and undisclosed commercial paper.
“Defendants did not maintain the same amount of reserves as Tether tokens in circulation. At times, Defendants had no reserves whatsoever. Further, these reserves did not contain U.S. dollars, as Tether suggested, but were a mix of other assets, such as overcollateralized loans and other undisclosed commercial paper.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
