Bitfinex has informed users that a class action complaint was filed against the exchange and Tether in the U.S. District Court for the Western District of Washington on November 22, 2019. They say that the claims against them are without merit, and they strongly contest the “bogus research” that is used to support them. The two companies also call it a “copycat lawsuit” to the one filed against them in the U.S. District Court for the Southern District of New York on October 6, 2019. As we reported at the time, that first suit accused them of creating the “largest bubble in human history,” and with causing well over a trillion dollars in damages.
The operators of the cryptocurrency exchange Bitfinex and the stablecoin Tether have notified users that they were hit with another class action lawsuit in U.S. courts over market manipulation allegations that the companies are trying to frame as mercenary and baseless.
Tether Operators Face New Complaint in US
“As we predicted last month, mercenary lawyers continue to try to use Bitfinex and Tether to obtain a payday,” the two companies said. “To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course. Once they are, Bitfinex and Tether will fully evaluate their legal options against those bringing and promoting the baseless claims.”
The companies also tried to get the support of the whole crypto community behind them by stating that “These absurd and groundless accusations are an attack on the growth, success and innovation of the entire digital token ecosystem, in which Bitfinex is proud to play a critical role. Meritless lawsuits like these are a continuing affront to the efforts and dedication of Bitfinex’s customers and all participants in the digital currency ecosystem. Our fight is the community’s fight.”
Fraud and Market Manipulation Accusations
The New York lawsuit accused the operators of Tether and Bitfinex of managing a sophisticated scheme to defraud investors, manipulate markets, and conceal illicit proceeds. According to the complaint, they commingled their corporate identities and customer funds while concealing their extensive cooperation. And they also allegedly lied to investors saying that the number of USDT tokens in circulation will always be the same as the amount of dollars in the companies’ bank accounts. This allegedly gave them the power to fake market demand for cryptocurrencies by just printing more USDT and using it to buy coins.
The USDT operators are already well used to facing accusations that they are manipulating the cryptocurrency market. Over the years many critics have made similar claims about the issuance of the stablecoin and its correlation to price rises. Despite this, it remains the top dollar-pegged digital instrument.
The biggest risk that Bitfinex and Tether face is likely to be action by U.S. authorities. Earlier this year the New York Attorney General’s (NYAG) office revealed that it has already taken aim at the stablecoin. It accused the companies of a cover-up to hide the loss of $850 million dollars of co-mingled client and corporate funds. The American investigators also demanded that Bitfinex turn over documents tied to Tether.