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Tether, Bitfinex Crypto Market Manipulation Class Action Lawsuit Overview:
- Who: Stablecoin issuer Tether and crypto exchange Bitfinex are being sued.
- What: The pair are accused of manipulating the cryptocurrency market and inflating the price of Bitcoin.
- Where: Litigation is pending in New York court.
Stablecoin issuer Tether and a number of crypto exchanges including Bitfinex will not have to face claims they ran a criminal enterprise, but are still under the spotlight for claims of fraud, monopoly and market manipulation, a New York federal judge has ruled.
On Tuesday, US District Judge Katherine Polk Failla published her opinion and order on a motion to dismiss claims against cryptocurrency exchanges Bitfinex, Bittrex, and Poloniex, stablecoin operator Tether and others.
In it, she opted to dismiss claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), including claims of racketeering, wire fraud, bank fraud, money laundering, engaging in monetary transactions in criminally derived property, and operating an unlicensed money transmitting business.
“The causal connection between Defendants’ purported racketeering and Plaintiffs’ injury is insufficiently ‘direct’ and ‘straightforward’ to satisfy the proximate cause requirement,” she ruled.
However, she kept claims of possible market manipulation, the catalyst for further monopoly claims. “Plaintiffs adequately allege common law fraud,” she wrote, simply.
Class Action Accuses Tether, Bitfinex, Others of Driving Up Price of Crypto
In the original, 593-paragraph class action complaint, a group of individual investors who purchased crypto-commodities detailed a wide-ranging conspiracy by the defendants to artificially inflate the price of crypto-assets.
According to Judge Failla, the thrust of the plaintiffs’ allegations is that the defendants engaged in a scheme to make large, carefully-timed purchases of crypto-commodities using a fraudulently issued crypto-asset — called “tether” or “USDT” — in an effort to signal to the market that there was enormous, organic demand for crypto-assets.
They alleged that this caused the price of those commodities to spike, thereby creating and sustaining a “bubble” in the crypto-commodity market.
The class action was first filed in October 2019, and brought claims under the Sherman Act, the Commodities Exchange Act, the RICO Act, the common law tort of fraud and New York General Business Law.
On Wednesday, Tether issued a statement celebrating what it saw as a win in court.
“Litigation will expose this case for what it is: a clumsy attempt at a money grab, which recklessly harms the whole cryptocurrency ecosystem,” it said. “This case is doomed.”
Meanwhile, last month settlements were reached in a class action lawsuit filed by Cryptsy account holders who allege they were unable to access cryptocurrency held in their Cryptsy accounts.
The news comes as nearly 1,000 cryptocurrency investors are expected to take part in litigation against Binance over a major outage the trading platform experienced.
What do you think of the allegations against Tether and Bitfinex? Let us know in the comments!
The Bitfinex, Tether Stablecoin Class Action Lawsuit is In re: Tether and Bitfinex Crypto Asset Litigation, Case No. 1:19-cv-09236-KPF, in the U.S. District Court for the Southern District of New York.
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