Hong Kong-based cryptocurrency exchange, Bitfinex, and its subsidiary Tether Ltd have a new legal battle to contend with, following a lawsuit filed against the companies at the U.S District Court in Southern New York.
The lawsuit filed by Roche Freedman specifically accused Bitfinex and its subsidiary of creating a ‘sophisticated scheme’ that took advantage of the cryptocurrency innovation to “defraud investors, manipulate markets and conceal illicit proceeds.”
The alleged scheme involved the buildup to the 2017-2018 crypto market bull run that saw Bitcoin (BTC) hit prices near $20,000 within a few months, as other cryptocurrencies skyrocketed within the same period.
“Part-fraud, part-pump-and-dump, and part-money laundering,” were terms used in the lawsuit to describe the scheme which was allegedly accomplished through Bitfinex and Tether.
The plaintiff claimed that the two firms commingled their corporate identities and customer funds while concealing their extensive cooperation in a way that enabled them to manipulate the cryptocurrency market with unprecedented effectiveness.
More precisely, Tether is alleged to have issued 2.8 billion USDT tokens between 2017 and 2018 and used it to flood their exchange to buy cryptocurrencies, a move that “artificially inflated demand for cryptocurrencies and caused prices to spike,” as per the lawsuit.
Another section of the document suggested that the increased demand and spike in prices created the ‘largest bubble in human history,’ which, when it burst in early 2018, saw $450 billion of value disappear from the crypto markets in less than a month.
“The fallout continues to affect the cryptocurrency market, including by causing prices to be lower than they would have been but for the manipulation,” the document claims before going on to allege that Bitfinex has not stopped defrauding the market despite ongoing investigations by the New York Attorney General, the CFTC and the Department of Justice.
Conclusively, Roche Freedman noted that calculating damages caused by the manipulative scheme at this stage is premature even though the liability likely surpass $1.4 trillion.
Bitfinex and Tether’s Response?
Although the accused firms are yet to issue another official response following the filing of the lawsuit on October 6, they did publish updates roughly 24 hours before it was filed.
In the updates, both Bitfinex and Tether claimed that the insinuations in the then-anticipated lawsuit are “meritless, reckless, and a shameless attempt at a money grab.” The firms pledged to defend themselves in any such action vigorously.
Your crypto deserves the best security. Get a Ledger hardware wallet for just $79!
Information found on this website is those of the writers quoted. It does not represent the opinions of Coinfomania on whether to buy, sell, or hold any investments. Readers must conduct their own research before making any investment decisions. Use the provided information at your own risk.