Another Class Lawsuit Claims Bitfinex, Tether Manipulated Bitcoin Market

Crypto exchange Bitfinex and its sister firm, stablecoin issuer Tether, have again been accused of working to manipulate the bitcoin markets.

It's also the second class action to have been brought in recent months relying on the New York case, which is still ongoing as the defendants appeal over whether they must continue to produce documentation.

The attorney general claims, among other things, that that the tether stablecoin was not fully backed by U.S. dollars.

In a lengthy list of claims, Young and Kurtz specifically allege that Bitfinex and Tether "Monopolized and conspired to monopolize the Bitcoin market," as well as manipulated the market, manipulated information or made inaccurate claims.

"Defendants' control of USD₮ issuances and Bitfinex permitted Defendants and their co-conspirators to coordinate purchases and sales with rising and falling Bitcoin prices. When Bitcoin prices were falling, Defendants and their co-conspirators printed USD₮s 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₮s to replenish Tether's reserves."

Both lawsuits also cite a study authored by professors at the University of Texas at Austin claiming that a single Bitfinex account used USDT to inflate the price of bitcoin in the lead up to its 2017 all-time high of around $20,000.

Both say they are bitcoin traders who traded at artificial prices due to the alleged actions of the defendants.

"At all relevant times, Defendants, including the employees that conducted Defendants' affairs through illegal acts, knowingly and intentionally made false statements to U.S. Bitcoin investors and the public for the purpose of concealing Defendants' scheme," the suit states, further alleging that the defendants profited at plaintiffs' expense.

Bitfinex took to its blog Sunday to call the Washington case "Mercenary and baseless," and suggest that such lawsuits "Are a continuing affront to the efforts and dedication of Bitfinex's customers and all participants in the digital currency ecosystem."

"As we predicted last month, mercenary lawyers continue to try to use Bitfinex and Tether to obtain a payday. To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course," the exchange wrote.