Home News Class Action Suit Against Tether & Bitfinex: Manipulation, Creating the "Largest Bubble...

Class Action Suit Against Tether & Bitfinex: Manipulation, Creating the “Largest Bubble in History”

TL;DR: “Today, @RocheFreedmanLP filed a class action lawsuit on behalf of those who own cryptocurrency against Tether and Bitfinex,” Kyle Roche, founding partner at Roche Freedman LLP, announced, “for manipulating the cryptocurrency market to create the largest bubble in history.”

Class Action Suit Against Tether & Bitfinex

The near 100-page complaint filed 6 October 2019 in the Southern District of New York is on behalf of principal plaintiffs “David Leibowitz, Benjamin Leibowitz, Jason Leibowitz,
Aaron Leibowitz, and Pinchas Goldshtein individually and on behalf of all others
similar situated,” and includes claims against the likes of Philip G. Potter, Giancarlo Devasini, Ludovicus Jan van der Velde, Reginald Fowler.”

The document is littered with words and phrases such as alleging Bitfinex and Tether engaged in “a sophisticated scheme that coopted a disruptive innovation — cryptocurrency — and used it to defraud investors, manipulate markets, and conceal illicit proceeds,” which plaintiffs argue was “Part-fraud, part-pump-and-dump, and part-money laundering,” commingling “corporate identities and customer funds while concealing
their extensive cooperation in a way that enabled them to manipulate the
cryptocurrency market with unprecedented effectiveness.”

For its part, Bitfinex and Tether issued a 5 October 2019 preemptive statement presumably ahead of the new class action lawsuit, warning of “an unpublished and non-peer reviewed paper falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market. Bitfinex vigorously disputes the findings and conclusions claimed by that source, which rely on flawed assumptions, incomplete and cherry-picked data, and faulty methodology.”

Bitfinex also charactered plaintiffs as being solicited by “mercenary lawyers” who used “this deeply flawed paper to solicit plaintiffs for an opportunistic lawsuit, which may have been the true motive of the paper all along.” And the complaint indeed references a key study profiled in Bloomberg last year (see graph above), insisting as a researcher explained, tethers (USDT) “are created by the parent company Tether Ltd., often in large chunks such as 200 million. Almost all new coins then move to Bitfinex. When Bitcoin prices drop soon after the issuance, [USDT] at Bitfinex and other exchanges are used to buy Bitcoin in a coordinated way that drives the price.”

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