The legal battle against Tether and its affiliated exchange Bitfinix intensifies as plaintiffs in a class-action lawsuit, ongoing since 2019, have filed an amended complaint in the Southern District of New York. This latest submission accuses the firms of orchestrating a price manipulation scheme involving USDT, Tether’s dollar-backed stablecoin.
Details of the Amended Complaint
The complaint outlines a detailed scheme where Tether and Bitfinix allegedly used USDT to artificially inflate cryptocurrency prices, particularly Bitcoin. According to the plaintiffs, these actions were not only deceptive but also illegal, violating both the Commodities Exchange Act (CEA) and the Sherman Antitrust Act.
Core Allegations
- Price Manipulation: The plaintiffs accuse Tether and Bitfinix of executing large, strategic purchases of cryptocurrencies to create the illusion of high market demand, thereby driving up prices.
- Misrepresentation of USDT Backing: The complaint further alleges that billions of USDT were issued without the one-to-one U.S. dollar backing Tether had promised, claiming instead that the USDT was “created out of thin air.”
- Resulting Damage: The alleged scheme has purportedly led to significant financial losses for other cryptocurrency traders, who were misled by the manipulated market conditions.
Defendants’ Response
In response, Tether and Bitfinix have dismissed the allegations as unfounded. They argue that extensive discovery, including over a million pages of documents and numerous depositions, has failed to uncover any evidence of the alleged market manipulation. The defendants describe the amended complaint as a desperate attempt to rejuvenate a faltering case.
- Commodities Exchange Act Violations: The plaintiffs claim that by manipulating cryptocurrency prices, the defendants engaged in fraudulent activities that are prohibited under the CEA.
- Sherman Antitrust Act Violations: The use of USDT to distort the crypto market is also alleged to constitute anti-competitive behavior under the Sherman Act.
The plaintiffs support their allegations with expert analyses that reportedly show how Tether and Bitfinix issued unbacked USDT and used this to purchase large amounts of cryptocurrencies. This analysis is crucial in their attempt to demonstrate the mechanics of the alleged manipulation and its impact on the market.
The lawsuit has been marked by various challenges and delays:
- Initial Filing: The case was originally opened in 2019 but has since encountered several procedural setbacks.
- Change of Legal Counsel: In 2022, the plaintiffs’ original legal counsel was removed, adding to the complexities of the case.
- Amendment Requests: In 2023, Tether and Bitfinix contested the plaintiffs’ request to amend their complaint, which has now led to the current iteration of the filing.
| Year | Event |
|---|---|
| 2019 | Initial lawsuit filed |
| 2022 | Removal of plaintiffs’ original legal counsel |
| 2023 | Defendants challenge amendment of the complaint |
| 2024 | Amended complaint filed, outlining detailed allegations |
As the case progresses, the cryptocurrency community and investors closely watch the developments. The outcome of this lawsuit could have significant implications for market transparency and regulatory oversight in the rapidly evolving digital currency space. With both sides presenting strong arguments, the legal battle between the plaintiffs and Tether/Bitfinix is set to be a pivotal moment in cryptocurrency regulation.
Featured image credit: Sasun Bughdaryan via Unsplash
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