Tether, Bitfinex face new lawsuits
The cryptocurrency entities find themselves facing a new round of complaints
The New York State Attorney General’s Office is already going after Tether and Bitfinex for allegedly offering services to US customers without authorization. The cryptocurrency firms have been mired in controversy dating back almost to the beginning of Tether’s introduction of the USDT stablecoin, and its interactions with the Bitfinex exchange have been the subject of many negative stories. They are now going to have to respond to a new lawsuit that reportedly has proof of the duo’s actions in manipulating the crypto markets to achieve their own goals, resulting in the “largest bubble in history.”
The New York law firm of Roche Freedman has launched a class-action lawsuit against the two companies, asserting that they have been involved in a “sophisticated scheme” that includes “part-fraud, part-pump-and-dump, and part-money laundering.” It further asserts that Tether has “issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices.”
On several occasions, Tether has been found to have “printed” millions of USDT tokens for various reasons without following the activity with the required subsequent steps, whether that be burning the tokens or releasing accurate data related to the printing.
When the USDT was first introduced, it was definitively pegged to the US dollar – each USDT was backed by a US dollar. However, this changed over time, without any notice on Tether’s part, and the stablecoin is now backed by dollars, other fiat, investments and other assets. The lawsuit adds, “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.”