Paolo Ardoino, chief technology officer (CTO) of Tether and Bitfinex, is expected to testify this week as part of a class action lawsuit filed against the companies. The process has been going on since 2019. According to the accusations, Tether and Bitfinex used the USDT stablecoin to manipulate the prices of cryptocurrencies, especially Bitcoin (BTC).
Initially, Ardoino’s defense asked that the CTO’s testimony be postponed until October, to allow time for preparation. However, Judge Katherine Failla, from New York, denied the request for a postponement, summoning Ardoino to testify this week.
Initially filed in 2019 by LeboBTC co-founder Jason Leibowitz, the lawsuit alleges financial misconduct by the two companies. According to the lawsuit, the manipulation caused $1.4 trillion in damages, which is the plaintiffs’ demand. The charges range from bank fraud to money laundering.
For years, the cryptocurrency community has raised suspicions about Tether and USDT. In addition to accusations of manipulation, there were suspicions regarding Tether’s transparency regarding the stablecoin’s backing. Tether, however, has firmly denied any wrongdoing and has always maintained that its data is transparent.
In addition to financial misconduct, the process precisely investigates the quality and transparency of the USDT reserves that Tether claims to have. Previously, both parties clashed over the topics Ardoino’s testimony could cover.
These include alleged gaps in business records, companies’ lending policies, and the portfolios that held company reserves. Consequently, the judge’s latest order specifies that Arduino should only talk about indisputable topics.
Currently, USDT dominates the stablecoin market by far: 64% of the stablecoin market value is USDT. Its market value is US$83.6 billion. However, US regulators are concerned about the company’s reserves.
Last year, Tether and Bitfinex closed an investigation with the New York State Attorney General, resulting in a ban on their trading activities in the state. This agreement closed a case against the company that had been ongoing since 2018.
Judge criticizes lack of preparation
In the process, Ardoino’s defense insisted on the argument that the preparation time was too short. However, Judge Failla had harsh words for the defendants, stating that any lack of preparation was “largely their fault”.
Furthermore, she expressed concern about the progress of the process, which has been stalled for more than four years. Failla clarified that adding yet another topic since August should not significantly burden defendants.
The market is watching closely as Tether and Bitfinex navigate the complicated legal landscape. What comes out of this week’s testimony could significantly impact these companies and the cryptocurrency market. Meanwhile, USDT is worth $0.999, down 0.1% in the last 24 hours.