Tether and Bitfinex seek to dismiss market-manipulation suit

The issuer of the stablecoin Tether and iFinex, the parent company of the cryptocurrency exchange Bitfinex, filed a motion in court to dismiss the collective action alleging market manipulation attributed to them, brought by traders in October 2019.

MEMORANDUM OF LAW IN SUPPORT OF TETHER AND BITFINEX by ForkLog on Scribd

The complaint states that over five years Tether issued USDT tokens without backing totaling $3 billion. Bitfinex subsequently used them to purchase cryptocurrency to support prices during market downturns. According to the plaintiffs, such manipulation contributed to a sharp rise in the cryptocurrency market’s total capitalization to $795 billion by the end of 2017.

The plaintiffs are five crypto traders. They allege that they bought cryptocurrency at inflated prices and sustained substantial losses. The action is a class action and “on behalf of anyone in the United States who may have suffered losses from inflated cryptocurrency prices”.

In the motion, the defendants’ lawyers assert that the accusation rests on “unfounded assertions”, rather than direct knowledge of the matter. They added that the plaintiffs failed to demonstrate the alleged artificial nature of prices resulting from the purported manipulations.

According to representatives of Tether and iFinex, the court should also dismiss the antitrust allegations. The reason is the lack of explanations as to how the defendants allegedly sought to achieve a dominant market position by inflating prices or restricting supply.

Two additional lawsuits have been filed against iFinex and Tether alleging that USDT is not sufficiently backed by reserves. The first was filed by the New York Attorney General in April 2019. The plaintiff in the second class action in November 2019 was a group of traders.

As reported earlier, in June 2020 the plaintiffs accused Bittrex and Poloniex of aiding Tether and iFinex’s fraudulent schemes. In August, the lawyers for the cryptocurrency exchanges approached the court with a request to have the case concerning their alleged complicity considered on an expedited basis.

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