According to the report, Tether, a stablecoin issuer, had invested some of its reserves in Bitcoin (BTC). As per the court filing document, David Miller, an attorney for Tether’s associated firm Bitfinex said that Tether invested “a small amount” of Tether’s reserves into bitcoin, specifying that “prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.” He further noted that Tether made “other investments, including purchasing other assets.”
Responding to Miller’s statement, New York Supreme Court Judge Joel M. Cohen said that “Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate, that seems like it’s playing into what they are saying.” Earlier it was reported that the New York Attorney General’s (NYAG) office alleged the crypto exchange Bitfinex lost USD 850 million and later used funds from Tether to secretly cover the shortfall. However, Lawyers from Tether totally refused the allegations and confirmed preexisting rumors that its tokens did not have full reserve backing, and was in fact only 74% backed by fiat dollars and other reserves.
Moreover, the New York Attorney General’s Letitia James requested the disclosure of documents pertaining to an alleged deal made between the two companies. Following the request, the New York Supreme Court judge Joel M. Cohen added that the parties should try to resolve their dispute and submit a refined argument, and further claiming that the NYAG cannot bring the full force of its court order against Bitfinex and Tether. On the contrary, both companies denied any wrongdoing, and profoundly criticizing New York authorities for their complaint.