Attorneys for stablecoin issuer Tether and its parent company, iFinex, pushed back against CoinDesk, joining a legal case between it and the New York attorney general’s office (NYAG), saying, “The records at issue here include Bitfinex and Tether’s closely guarded, non-public internal records that were developed at considerable expense and could not be acquired by its competitors other than through this FOIL request.”

With more than $78 billion worth of tokens in circulation, Tether is by far the largest stablecoin issuer in the crypto markets and accounts for roughly half of all transactions against bitcoin on centralized exchanges, according to data from CryptoCompare.

The company settled a case with the NYAG for $18.5 million a year ago stemming from its part in its sister company Bitfinex’s attempts to cover up an $850 million hole after problems with its payment processor Crypto Capital Corp.

“Bitfinex and Tether recklessly and unlawfully covered up massive financial losses to keep their scheme going and protect their bottom lines,” New York Attorney General Letitia James said in a release when the case was settled.

Besides paying a fine, Tether and Bitfinex are also required to submit quarterly statements showing the stablecoin issuer’s assets. After Tether submitted its balance sheet to the NYAG, CoinDesk made a Freedom of Information Law (FOIL) request for information about the reserves. That request was initially rejected, but CoinDesk subsequently appealed; an appeals officer agreed and reversed the decision, but Tether challenged the NYAG’s office in August, saying that releasing the details of its balance sheet would “would tilt the competing playing field against Tether.”

In a statement published Friday, Tether said:

“The settlement specified what information should be disclosed publicly (such as a breakdown of Tether’s reserves by category) and what should be disclosed privately to NYAG (such as particular investment details). The private aspects are those that no business would publish for the competition to exploit.”

In the Feb. 17, 2021 agreement, it was stipulated that:

“Publication of Tether’s Reserves: On at least a quarterly basis for a period of two (2) years following the effective date of this Settlement Agreement, Tether will publish the categories of assets backing tether (e.g., cash, loans, securities, etc.), specifying the percentages of each such category, and specifying whether any such category constituting a loan or receivable or similar is to an affiliated entity, in a form substantially similar to that previously presented to the OAG.” [Emphasis added.]

Tether, together iFinex, which also owns cryptocurrency exchange Bitfinex, petitioned the New York State Supreme Court in August to block the state's attorney general's office from providing CoinDesk with documents detailing its reserves. CoinDesk became part of the case in January on the grounds that it had an interest in its outcome and that the investing public does, too.

In both its legal filing, as well as a public statement, Tether alleged that CoinDesk is seeking the documents because its parent company, Digital Currency Group (DCG), is an investor in Circle, the issuer behind a competing stablecoin. DCG also backs Blockstream, developer of the Liquid Network, a sidechain of Bitcoin and one of several systems Tether uses to issue USDT.

UPDATE (Feb. 4, 20:08 UTC): Adds Tether statement and additional background.