Crypto Traders' Lawsuit Claims Bitfinex, Tether Cost Market Over $1 Trillion

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A new lawsuit claims crypto exchange Bitfinex and its sister company Tether manipulated the crypto market, harming traders and benefiting themselves.

Bitfinex and a number of affiliated entities engaged in deceptive, anti-competitive and market manipulative practices, resulting in economic damages for the plaintiffs, according to a class action lawsuit filed Sunday in New York.

Bitfinex, Tether, Digfinex and current executives; former chief strategy officer Philip Potter.

In the complaint, the plaintiffs further claims Bitfinex and Tether "Shared false information about USDT being backed 1:1 by U.S. dollars," referring to an allegation made by the New York Attorney General's office in April.

It continues to allege the USDT was used to purchase bitcoin to flood the crypto market, spurring the 2017/8 bull market and subsequent bust.

Which stated that the companies expected a lawsuit based on "An unpublished and non-peer reviewed paper falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market."

"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. It is irresponsible to suggest that Tether enables illicit activity due to its efficiency, liquidity and wide-scale applicability within the cryptocurrency ecosystem."

Allegations that Tether has been used to manipulate the cryptocurrency market have existed for more than a year.

In a study published last June., researchers with the University of Texas at Austin said bitcoin's price rose after the "The Bitfinex exchange use[d] tether to purchase bitcoin when prices are falling."

By University of Queensland professor Wang Chun Wei, found that while "Tether grants were potentially timed to follow bitcoin downturns," the actual correlation was "Not statistically significant."

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