A United States judge has concluded the dismissal of a class action lawsuit against stablecoin issuer Tether and its affiliate crypto exchange Bitfinex, two years after the plaintiff made a move against the firms.
According to a blog post, Chief Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York denied Shawn Dolifka’s motion for leave to amend the class suit. Dolifka has now chosen not to appeal the judge’s decision.
The Class Suit
Dolifka filed a class suit against Tether in October 2021, accusing the company of misleading customers regarding the attributes of its stablecoin, USDT, and creating a scheme to induce users to purchase the crypto asset.
With Matthew Anderson, Dolifka accused Tether of falsely representing USDT reserves, arguing that the company maintained cash reserves that were less than 4% of the tokens in circulation.
The duo insisted that the reserves did not contain U.S. dollars and were mostly made up of assets like overcollateralized loans and other undisclosed commercial paper, and worse still, the firm had not undergone any professional audits despite promising transparency to its customers.
In addition, the lawsuit alleged that USDT was not a stablecoin, as it was not backed 1:1 with the U.S. dollar, as Tether had claimed. The plaintiffs claimed Tether’s alleged misconduct qualified them to receive compensatory and statutory damages, prejudgment and post-judgment interest, and attorneys’ fees.
Tether called the lawsuit nonsense and copycat in response, stating that the plaintiffs and law firm were looking for a payout based on “meritless claims.” The company’s CEO, Paulo Ardoino, said the class suit would bite the dust like others.
With Judge Taylor finalizing the dismissal of the lawsuit, Tether has reiterated its stance to never fall prey to “shameless litigation money grabs.”
“Quite unlike Dolifka’s ill-advised decision to file the action in the first place, his decision to forego his appeal rights was the correct decision. His claims were entirely meritless, and no amount of further litigation would have resulted in Dolifka or his attorneys realizing anything monetarily or otherwise,” Tether added.