Debevoise & Plimpton LLP has achieved a significant victory for its clients Tether and Bitfinex by obtaining dismissal of a class-action lawsuit against both entities in the U.S. District Court for the Southern District of New York.
The lawsuit, which was filed by purchasers of the Tether stablecoin “USDT” in 2021, alleged that Tether and Bitfinex made false statements about the adequacy of the reserves backing the USDT tokens. The plaintiffs alleged that they would not have purchased USDT had they known those representations were false, and they asserted claims for breach of contract, unjust enrichment, and violation of various state deceptive trade practices statutes.
In May 2022, Debevoise filed a motion to dismiss the case, arguing that the plaintiffs lacked Article III standing because they failed to plead an injury, and that they also failed to state a claim for a variety of reasons. As a stablecoin, USDT is intended to be pegged to the U.S. dollar and maintain a constant price of $1. Debevoise submitted to the Court historical market prices of USDT which showed that the coin, in fact, maintained a consistent price of $1. The team argued that if the plaintiffs had regretted their purchases and were concerned about Tether’s reserves, they could always sell their USDT that same price.
On August 4, Judge Laura Taylor Swain of the SDNY granted the team’s motion to dismiss and dismissed the complaint in its entirety for failure to plead Article III standing. Judge Swain fully agreed with Debevoise’s arguments, highlighting that the plaintiffs’ complaints lacked factual support for the alleged injury and distinguished the cases that the plaintiffs relied on as related to consumer products or services that, unlike in this case, were worth less than what was advertised.
The Debevoise team was led by litigation partners Maeve O’Connor and Elliot Greenfield and included counsel Stephan Schlegelmilch and former associates Melanie Burke and Samuel Rosh.