Plaintiffs File New, Slimmed Down Complaint in Class Action Lawsuit Against Tether

The second amended complaint accuses Tether of manipulating the price of bitcoin and violating antitrust laws.

Plaintiffs in an ongoing class action lawsuit against crypto companies Tether and Bitfinex have filed a new, slimmed-down complaint.

The complaint, filed in the Southern District of New York (SDNY) on Monday, accuses Tether and Bitfinex of operating a “sophisticated scheme to artificially inflate the price of cryptocurrencies.” The plaintiffs allege that the companies did this by pushing Tether’s dollar-backed stablecoin, USDT, into the cryptomarket without it being fully backed by U.S. dollars. This, the plaintiffs claim, created the illusion of increased demand for cryptocurrencies.

The complaint also alleges that Tether and Bitfinex facilitated trading of cryptocurrencies on credit and loaned funds, which ultimately drove up crypto prices. The plaintiffs further allege that Tether and Bitfinex engaged in market manipulation, monopolization, and an agreement in restraint of trade, which are all violations of the Sherman Antitrust Act.

The new complaint is a slimmed-down version of the previous complaints, which contained eight and 12 causes of action, respectively. The new complaint contains three causes of action – violating the Commodities Exchange Act (CEA) via market manipulation, monopolization, and agreement in restraint of trade.

The suit contained chat and deposition logs from the companies' operators, allegedly admitting to manipulative actions.

The suit claims that "[Tether Chief Financial Officer Giancarlo] Devasini also acknowledged at his deposition that issuing a substantial credit line 'that is not backed by anything of an enormous amount of money' would cause customers to 'use this fake money to buy an enormous amount of Bitcoin and, therefore, the price will increase.'"

A spokesperson for Tether told CoinDesk that the claims in the second amended complaint, “as with the prior complaint” are “wholly without merit.”

“Ultimately, it is the facts and evidence that matters, not plaintiffs’ false and misleading allegations,” the spokesperson for Tether said. “We remain confident that we will prevail in this litigation, and that plaintiffs’ nonsensical conspiracy theories will be rejected.”

The class action lawsuit, which was first filed in 2019, has seen several hiccups. In 2022, the original plaintiffs’ counsel, crypto law firm Roche Freedman (now Freedman Norman Friedland), was removed from the case after video recordings of attorney Kyle Roche appearing to admit to filing frivolous investor lawsuits to help a client surfaced.

Last year, lawyers for Tether and Bitfinex filed a memorandum of opposition against the plaintiffs’ motion to amend their complaint for a second time, calling it “in reality a motion for leave to start over” after the discovery process had concluded. However, in June, Failla granted the plaintiffs’ motion for leave to file the second amended complaint.

The lead plaintiffs in this case are U.S.-based crypto traders Matthew Script, Benjamin Leibowitz, Jason Leibowitz, and Pinchas Goldshtein, although several other civil class action suits and their plaintiffs have also joined the case.

Attorneys for the plaintiffs did not respond to CoinDesk’s request for further comment.

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