Tether and Bitfinex Accused of Crypto Price Manipulation in Amended Class-Action Lawsuit

a years-long class-action lawsuit against Tether and Bitfinix filed an amended complaint accusing the companies of manipulating crypto prices through a deceptive scheme involving USDT, Tether’s dollar-backed stablecoin, according to court documents filed in the Southern District of New York.

Plaintiffs in a years-long class-action lawsuit against Tether and Bitfinix have filed an amended complaint, accusing the companies of manipulating crypto prices through a deceptive scheme involving USDT.

The complaint, filed in the Southern District of New York and obtained by Cointelegraph, alleges that Tether and Bitfinix “executed a sophisticated scheme to fraudulently inflate the price” of cryptocurrencies, including Bitcoin (BTC), through “massive, carefully timed purchases […] to signal to the market that there was enormous demand and thus cause the price of those commodities to spike.”

The companies financed these purchases with billions of dollars in USDT, which — in contradiction to repeated assurances by Tether — was not, in fact, backed one-to-one by United States dollars, the plaintiffs claim. In doing so, they allege that Tether and Bitfinix violated both the Commodities Exchange Act (CEA) and the Sherman Antitrust Act.

“In reality, Tether issued billions of USDT to itself with no US dollar backing — simply creating the USDT out of thin air,” the complaint states, adding that the deception “ultimately result[ed] in billions of dollars of damage to innocent crypto commodity purchasers.”

This is the third complaint to be filed in the case, which was opened in 2019 and has since faced repeated delays, including the removal of the plaintiffs’ original legal counsel in 2022. Tether and Bitfinex have challenged the plaintiffs’ request to amend the complaint in 2023, calling it a last-ditch effort to revive a failing case.

“The reason for this dramatic change of course is clear: two years of fact discovery — including more than a million pages of document discovery and numerous […] depositions — have not revealed a single shred of evidence supporting the market manipulation scheme alleged in the [Complaint],” the defendants argued.

However, the plaintiffs now assert that “[e]xpert analysis shows that Bitfinex and Tether issued unbacked USDT and used that debased USDT to buy large amounts of crypto commodities” in the filing.

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