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Tether and Bitfinex Face New $1 Trillion Class Action Suit

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Tether and Bitfinex seem to be unable to catch a break. In the wake of their case with the Office of New York’s Attorney General (ONYAG), both crypto companies are now facing a barrage of lawsuits. 

The punches keep coming

Earlier this week, Roche Freedman LLP, a law firm based out of New York, filed a class-action suit with the United States District Court for the Southern District of New York against the stablecoin operator and crypto exchange, claiming that both companies have been involved in concealing illegal proceeds, manipulating markets, and defrauding investors.

In a separate tweet, Kyle Roche, the founding partner of Roche Freedman, accused both companies of orchestrating the “largest bubble in history.”

The documents, which were filed on Sunday, claimed that Tether and Bitfinex created an elaborate fraudulent scheme, which involved “part-fraud, part-pump-and-dump, and part-money laundering.”

In the suit, the law firm alleged that Tether’s claim that it had backed up the number of USDT tokens by an equal amount of dollars was false. Instead, the firm claimed that the stablecoin operator had issued copious amounts of unbacked USDT in a bid to manipulate the price of the asset.

“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,” the document read. 

Citing a study published by the University of Texas in 2018, Roche Freedman alleged that all of these were done in cohorts with Bitfinex, and both companies were successful in creating “as much as half the growth in the cryptocurrency market,”  

In part, the document states that both companies had

“Commingled their corporate identities and customer funds while concealing their extensive cooperation in a way that enabled them to manipulate the cryptocurrency market with unprecedented effectiveness.”

An anticipated suit 

For their part, both companies definitely did see the suit coming. Late last week, they each issued statements which claimed that they expected a document “falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market.”  

In their rebuttal, they claimed that the accusations were based on “flawed assumptions, incomplete and cherry-picked data, and faulty methodology,” while adding that the paper itself hadn’t been peer-reviewed. They added that they expected to be sued soon, while also ascertaining that they would vigorously defend themselves. 

ONYAG’s fight isn’t over

The news is coming a week barely after the case against both firms by the ONYAG got its own update. The legal battle over an alleged cover-up of $850 million in losses has stretched on for the better part of the year now, with disputes over whether or not the ONYAG has the jurisdictional authority to sue both companies taking much of that time.

However, the Appellate Division of the New York Supreme Court ruled on September 24 that both firms could keep documents pertaining to the case. The case was a rebuttal to a previous ruling by New York Supreme Court Judge Joel Cohen, which ordered both firms to produce documents and information relating to the loss. 

While both parties have yet to make any moves, it is rather obvious that this case is far from over. With both Bitfinex and Tether now being sued for price manipulation, their defense attorneys have their work cut out for them. 

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