Plaintiffs renewed the lawsuit against Tether and Bitfinex once again

Another lawsuit has been filed against the Tether stablecoin issuer and the Bitfinex cryptocurrency exchange.

The plaintiffs have switched to filing lawsuits again against Tether and Bitfinex, accusing the companies of manipulating the price of Bitcoin (BTC) and other digital assets.

According to the plaintiffs, the defendants artificially inflated the price of virtual currencies by purchasing large amounts of coins at a certain time, creating the false impression that there was high demand for cryptocurrencies. Traders fell for this and bought coins, further increasing their rates.

“In reality, Tether issued itself billions of USDT with no US dollar backing — it simply created USDT out of thin air,” the complaint alleges, and the scam “ultimately” resulted in:[ed] “caused billions of dollars in losses to innocent crypto commodity buyers.”

Filing with the court

The initial statement of claim said that Tether had issued $3 billion worth of unbacked USDT tokens over the years, which Bitfinex then used to buy cryptocurrencies to prop up prices during market declines. The result of such manipulations was that the cryptocurrency market capitalization had grown to $795 billion by the end of 2017.

Lawsuit against Tether and Bitfinex

The lawsuit against Tether and Bitfinex began in 2019, but has so far yielded no results and is in danger of falling apart. The defendants explain this fact by the false nature of the accusations.

According to company representatives, the plaintiffs did not present any evidence that Tether and Bitfinex manipulated the price of cryptocurrencies by purchasing digital assets in exchange for unsecured funds consisting of stablecoins.

Five crypto traders were plaintiffs in this class action lawsuit. They claimed they purchased the cryptocurrency at inflated prices and suffered heavy losses.

The defendants’ lawyers stated in the petition that the accusations were based on false allegations and not based on direct information on the matter. They added that the plaintiffs failed to demonstrate the artificial nature of the prices due to the alleged manipulation.

The general list of charges includes violations of the US Commodity Exchange Act and the RICO Act, money laundering, pump and dump schemes, market manipulation through the issuance of USDT, and intentionally deceiving investors.

Paolo Ardoino prepares to destroy

Bitfinex announced on its blog that a new “baseless” lawsuit has been filed against it and its associated stablecoin issuer Tether.

The company stressed that it will not settle with the plaintiffs and will fight it in court. Bitfinex also stated that USDT stablecoins have never been used for market manipulation.

“It needs to be eliminated,” tweeted the exchange’s technical director, Paolo Ardoino, about the decision.

Withdraw Bittrex and Poloniex

In a $1.4 trillion lawsuit filed against Tether and Bitfinex in June 2020, plaintiffs accused cryptocurrency exchanges Bittrex and Poloniex of aiding the defendants during the 2017 Bitcoin rally.

“With the voluntary assistance of Bittrex, Inc. (“Bittrex”) and Poloniex LLC (“Poloniex”), two other crypto exchanges, Bitfinex and Tether, used fraudulently issued USDT to make strategically timed, large-volume purchases of crypto commodities as their prices were declining.”

Filing with the court

The plaintiffs alleged that Bittrex and Poloniex were directly involved in the scheme by creating the illusion of fresh liquidity flowing into the market with multiple buy orders for BTC.

Penalty for Tether and Bitfinex

In February 2021, the New York City Attorney’s Office (NYAG) settled a legal dispute with Bitfinex and Tether. The companies were ordered to pay $18.5 million in fines and submit quarterly reports on their activities.

This $18.5 million should be seen as a measure of the desire to put this matter behind us and focus on growing the business, as Bitfinex and Tether general counsel Stuart Hoegner said, adding that Tether has voluntarily provided USDT collateral information to the NYAG and will continue to do so for two years.

The deal was intended to resolve the validity of the reserves backing USDT, a long-standing concern for the crypto industry. Since Tether will now be required to report its reserves, depending on the level of reporting detail, investors may have better tools to evaluate claims that the company is issuing fiat tokens to artificially inflate the price of Bitcoin.

Tether maintains leadership despite lawsuits

Despite numerous lawsuits, Tether remains the clear market leader among stablecoins.

According to the latest data, the market value of USDT has reached a record high of $113 billion. Thus, the coin occupies 70% of the stablecoin market.

Source: DefiLlama

The increase in supply shows that the digital currency market is increasingly accumulating capital and does not strengthen the company’s position very much.