The Tether stablecoin is backed in some part by bitcoins. David Miller, an attorney for Tether’s sister firm, cryptocurrency exchange Bitfinex, revealed in court last week that Tether has invested “a small amount” of the reserve dollars backing the tethers (USDt) in bitcoins (BTC). He added that the company had also invested in other undescribed assets.
On May 16, New York State Supreme Court Judge Joel Cohen modified an injunction granted to James that froze the ability of stablecoin issuer Tether from loaning any more money to its sister company, cryptocurrency exchange Bitfinex. But, Tether’s ability to loan Bitfinex any more money also remains frozen, and all the judge did in limiting the order to 90 days is make the Attorney General’s office reapply for the injunction once a quarter if they want to keep investigating.
Lawyers for iFinex, the parent company of Tether and cryptocurrency exchange Bitfinex, told the New York Supreme Court on Monday that the language of New York State Attorney General Latitia James’ proposed injunction on Tether using dollar reserves backing its USDT stablecoin could prevent it from making payroll or paying bills.
As Tether customers pull money out, it wants some of its remaining dollars to be put to use instead of sitting in a bank, according to its attorneys.