Tether and Bitfinex Face Class Action Lawsuit for Crypto Market Manipulation

Stablecoin operator Tether and crypto exchange Bitfinex are in trouble yet again as both these companies have been slapped with class action lawsuit by New York-based legal firm Roche Freedman.

The law firm has accused the two companies of engaging in activities involving crypto market manipulations thereby defrauding investors. On Monday, October 7, Freedman’s founding partner Kyle Roche tweeted: “Today, filed a class action lawsuit on behalf of those who own cryptocurrency against Tether and Bitfinex (and others) for manipulating the cryptocurrency market to create the largest bubble in history”.

The official lawsuit document states that both - Tether and Bitfinex carried out a “sophisticated scheme” that involved “part-fraud, part-pump-and-dump, and part-money laundering.”

The lawsuit states that during the peak of the crypto markets in December 2017, Tether had supplied Bifinex additional USDT tokens without actually backing them with real USD. These additional supply of tokens was later used for Bitcoin price manipulation in the market.

The document states: “Because the market believed the lie that one USDT equaled one U.S. dollar, Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created.”

Although this is not for the first time that Tether and Bitfinex are being accused for market manipulation. Previously, the New York Office of the Attorney General (NYOAG) had accused both these companies on similar charges.

However, this time, Tether seemed to knowing that the lawsuit was coming their way and both the companies claimed innocence just a day before the lawsuit filing.

Tether released a statement last Saturday calling these allegations to be absolutely “baseless” and “growth and success of the entire digital token community”. It said: “Tether vigorously disputes the findings and conclusions claimed by that source, which rely on flawed assumptions, incomplete and cherry-picked data, and faulty methodology.”

Claiming absolute innocence in this matter, Tether said: “Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing. All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets”.

If further added that any claims based on these insinuations are meritless, reckless and a shameless attempt at a money grab.