Tether's general counsel admitted that about 26 percent of USDT's legal tender reserves were not backed up

Stuart Hoegner, USDT's general counsel for stable currency, said that as of April 30, only about 74 percent of USDT's funding came from its legal equivalent.

Coindesk (Coindesk)reportsUSDT's parent company, Tether, holds about $2.1 billion in cash and short-term securities, Stuart hoegnerwrote in an affidavit April 30. Stuart Hoegner is also general counsel for Bitfinex, a cryptographic exchange that has the same executives and shareholders as Tether.

Block beat Blokcbeats wrote last week about the two companies being accused by the New York attorney generalBitfinex: BTC could fall below $1,000 if we don't act. New York,Bitfinex borrowed more than $600m from Tether, after losing $850m, the attorney-general said.

Late on Tuesday, New York Supreme Court judge Joel Cohen ordered the New York Attorney General's office to show the court why the New York Attorney General's original unilateral order against Bitfinex and Tether should not have been completely rescinded or at least modified by May 6, 2019Submit a detailed description and response to the matter.

The order will also directly force Bitfinex and Tether to file certain documents with the New York attorney's office by May 3, which they can use to make their case to the Supreme Court in support of documents that will not be withdrawn or amended.

In fact, under a subtitle called "Tether holders have no risk," Hoegner confirms that USDT is no longer 100% cash or liquid backed. He wrote in the document:

"As of the date of [April 30] when I signed this affidavit, Tether had cash and cash equivalents (short-term securities) on hand amounting to approximately $2.1 billion, representing approximately 74% of the current outstanding Tether."

Blockbeats learned that there were about 2.8 billion USDT tokens as of the early hours of May 1, according to Omni resource manager, a block resource manager for Tether. That is to say, about $700 million of USDT does not have the corresponding legal tender reserve support.

But another attorney representing Tether, Zoe Phillips of Morgan Lewis, wrote in a legal memo in support of the defendant,Tether doesn't need to hold $1 per USDT

"According to the attorney general, the line of credit needed to be frozen, and it inappropriately weakened the foreign exchange reserves, which would be used for redemption.

She added that the terms of the Tether and Bitfinex credit agreements were "negotiated at a distance on commercially reasonable terms". Both companies are represented by independent lawyers, she said.

In his affidavit, Hoegner wrote that Bitfinex and Tether's loan agreement was made "to protect the virtual currency market," perhaps underplaying concerns that the two companies form an important part of the infrastructure of the cryptographic market. Any disruption to Bitfinex's business could hurt Tether, he added.

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