Tether and Bitfinex have reached a settlement in their dispute over a Freedom of Information Law (FOIL) request filed by a group of journalists, including Zeke Faux from Bloomberg Businessweek. In a recent announcement, Tether described the resolution as a move towards increased transparency in the industry.
Although Tether and Bitfinex reiterate their commitment to transparency, they made it clear that this does not entail a complete release of all their documents. The companies emphasized that a wholesale release of all documents would not align with standard business practices. Nevertheless, by dropping opposition to the FOIL request, Tether and Bitfinex demonstrate a willingness to share information within certain boundaries.
This incident is not the first time Tether has encountered a FOIL request.
In June 2021, CoinDesk submitted a similar FOIL request regarding documents related to Tether’s reserves during the New York Attorney General’s inquiry. Tether sought to prevent the release of these documents but lost in court. CoinDesk became involved in the case to support the release of the documents, arguing that it was in the public interest. Tether opposed CoinDesk’s participation, but a New York judge dismissed their objection.
In their recent statement, Tether and Bitfinex expressed their willingness to engage constructively with journalists and regulatory authorities who adhere to ethical reporting standards and respect data privacy boundaries. They stated, “We remain open to constructive engagement with journalists and regulatory authorities who adhere to ethical reporting standards and respect data privacy boundaries.”
The Controversy Around USDT
Tether’s USDT is currently the largest stablecoin globally, with a value of approximately $88.5 billion. It plays a vital role in the cryptocurrency ecosystem by enabling the movement of funds on a global scale. However, there have been concerns about the use of USDT in illicit activities.
In the book “Number Goes Up” by Zeke Faux, instances were highlighted where USDT was involved in scams, including “pig butchering” scams. It’s important to note that Tether, in collaboration with the U.S. Department of Justice, recently announced the freezing of funds associated with such scams. This reflects efforts to address and prevent illicit activities involving USDT.
There has indeed been controversy surrounding the backing of Tether’s USDT stablecoin. USDT is a type of stablecoin designed to be pegged to the value of the U.S. dollar, providing stability in the often volatile cryptocurrency market.
Questions have emerged regarding the extent to which USDT is genuinely backed by reserves. Tether has asserted that each USDT token is backed on a one-to-one basis by U.S. dollars held in reserve. However, the absence of a transparent audit or regulatory oversight has fueled skepticism. Accusations have been made that Tether may not have sufficient reserves to fully back all the USDT in circulation. This lack of clarity has contributed to ongoing concerns within the cryptocurrency community.