Tether, the issuer of the world’s largest stablecoin, has deposited over $1 billion with a subsidiary of Britannia Financial, a global investment bank. The funds are now involved in a legal dispute between Britannia and another firm, Arbitral International, in London’s High Court.
Tether’s USDT token is widely used in the crypto market as a hedge against volatility and a medium of exchange. According to its latest transparency report, Tether has $86.4 billion worth of assets backing its tokens, of which $5.2 billion are secured loans.
One of these loans is a deposit of more than $1 billion that Tether made with Britannia Global Markets, a subsidiary of Britannia Financial, a London-based investment bank.
According to the Financial Times, which cited filings made in the High Court, this deposit is now at the center of a legal battle between Britannia and Arbitral International, a British Virgin Islands-registered firm.
The dispute stems from a deal that Britannia made with Arbitral in June 2021, when it bought a Bahamas brokerage from Arbitral for $15 million.
Arbitral claims that it is entitled to extra money from assets generated by the business in the year following the sale, according to an agreement between the two firms.
The British bank alleges that Britannia failed to pay the full price for the brokerage and is seeking to freeze Britannia’s assets, including the Tether deposit.
Britannia, however, argues that the Tether deposit is unrelated to the brokerage deal and belongs to Britannia Global Markets, not Britannia Financial.
Britannia also claims that Arbitral is trying to extort money from it and that the Bahamas brokerage was not profitable. The case is expected to go to trial in early 2024.
The outcome could have significant implications for Tether and its users, as it could affect the availability and security of Tether’s assets.
Tether has faced scrutiny and criticism in the past for its lack of transparency and audits and its involvement in legal issues with regulators and other entities.
