What is the threat of a Tether litigation?

January 15th is the deadline by which Bitfinex and Tether must submit millions of pages of documents to the officeNew York City Attorney Letitia James.

Tether is also facing a major class action lawsuit, in which it was accused of contributing to "the biggest bubble in human history in 2017."

Last August John M.Griffin and Amin Shams, two academics who study cryptocurrencies, published a study: “Is Bitcoin Really Unpegged?” which analyzed Tether flows and found that most of BTC's price movements during the 2017 run-up were driven by a "single entity." 

In addition, scientists write that Tethercould specifically print coins to cover holes in her balance sheet. Let us remind you that in the first week of January alone, Tether printed more than 2 billion USDT. 

Whatever the investigation in New York,Tether's short history is already replete with strange criminal characters, unsolved hacks, sudden switches between foreign banks and huge unexplained losses. 

Tether management has always stated that for everyoneissued USDT will account for one US dollar in the bank. But after years of evasion and refusals to issue a full audit of its finances, Tether's lawyer finally admitted in a 2019 court record that Tether is only 74% secured. Tether's continued rejection of full audits, coupled with the feverish printing of new coins, has led many critics to question even that 74 percent figure.

Problems with Tether create a lot of risks becausethat this is not just a shell company with opaque financial transactions. Bitfinex and Tether's network of relationships extends throughout the cryptocurrency world, including numerous exchanges, large traders and unaccountable executives. 

The Tether situation has become a pretext for stricter regulation of stablecoins around the world.

Lawsuit May Force Tether to Disclosemore information about their internal operations and decision-making processes, and their unclear banking relationships. In its most devastating case, this array of legal and regulatory threats could bring down Bitfinex and Tether completely and result in billions of dollars in losses for investors.

If Tether collapses due to government crackdown, the price of Bitcoin and other cryptocurrencies could plummet. Tens of billions of dollars from institutional investors will disappear. 

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