A class-action suit against both Tether and cryptocurrency trading platform Bitfinex alleging that these parties manipulated the bitcoin price back in 2017 has been withdrawn.
Tether and Bitfinex Are In a Rut
Note that this doesn’t mean the lawsuit has been dropped or taken out of commission. Rather, it was withdrawn and then resubmitted through a new plaintiff in an entirely different jurisdiction.
Both companies have been under fire for some time when in 2018, University of Texas finance professor John Griffin issued a report suggesting that both had been responsible for manipulating the bitcoin price and causing the meteoric rise the currency incurred in late 2017. At that time, one unit of BTC was trading for nearly $20,000 – a price it’s yet to emulate.
The following year, bitcoin – as well as the entire cryptocurrency market – began experiencing harsh drops that took it down into the red for the longest time. Bitcoin itself lost more than 70 percent of its overall value and gains and was trading for as low as $3,500 by the time Thanksgiving had rolled around. Other coins, such as Ethereum, lost as much as 90 percent, and many couldn’t help but wonder if something fishy was going on.
The idea is that Tether owners repeatedly used the allegedly USD-backed stable coin to purchase bitcoin in 2017 whenever it incurred even the smallest of losses. This also tied bitcoin to USD and kept its price consistently bullish.
In 2019, Griffin revamped his report to suggest that while he still largely believes Tether was the primary tool for keeping BTC in excessive bull territory, the manipulation did not occur at the hands of multiple individuals, but rather a single whale that utilized a Bitfinex account to purchase and move millions of dollars in BTC funds.
Executives of both Tether and the cryptocurrency exchange have repeatedly denied the claims.
The court filing initially occurred in late November of last year in Washington at the hands of Eric Young and Adam Kurtz. They later asked that this lawsuit be dismissed on January 7. It was refiled just a day later in the Southern District of New York through new plaintiff David Crystal.
All three men allege that they were early bitcoin traders who suffered heavy losses at the hands of Tether and Bitfinex, both of which they say, “monopolized and conspired to monopolize the bitcoin market.”
Some Deny This Happened
The original court filing explains:
When bitcoin prices were falling, defendants and their co-conspirators printed USD and artificially increased the price of bitcoin. Once defendants and their co-conspirators artificially inflated the price of bitcoin, defendants and their co-conspirators then converted the bitcoin back into USD to replenish Tether’s reserves.
Stuart Hoegner, general counsel to Bitfinex, commented that the case, regardless of where it’s filed, was “meritless,” and likely to be dismissed soon.
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