Bitfinex accused of manipulating the Bitcoin market again

The cryptocurrency exchange Bitfinex and its sister company Tether, the issuer of the stablecoin, are once again accused of manipulating the Bitcoin market.

A new class action lawsuit filed by representatives Eric Young and Adam Kurtz on 11/22 in the Western District Court of Washington draws heavily from details presented in a similar case brought by the New York Attorney General in April regarding the same incident.

This marks the second class action lawsuit against Bitfinex since the allegations in New York, but the case is still ongoing due to an appeal by the defendants on the issue of whether they are required to continue producing documents. The Attorney General also added:

In addition to attempting to manipulate the bitcoin market, the issuance of the USDT stablecoin by its sister company did not receive full backing in US dollars.

In a lengthy list of claims, Young and Kurtz specifically allege that Bitfinex and Tether monopolized and conspired to monopolize the bitcoin market, manipulating information or making false claims. They further explain how the defendants' improper actions have influenced the manipulation of bitcoin futures prices from 10/1/2010 to the present, stating:

Defendants' issuance of USDT and control over Bitfinex allowed them and their co-conspirators to coordinate buying and selling with the rise and fall of bitcoin prices. When the price of bitcoin drops, defendants and their co-conspirators issue US dollars and artificially raise the price. Once the defendants and their co-conspirators artificially inflate the price of bitcoin, they convert bitcoin back to US dollars to replenish Tether reserves.

Both class action lawsuits reference a study written by a professor at the University of Texas at Austin, claiming that a single Bitfinex account using USDT inflated the price of bitcoin until its historical high around $20,000 in 2017.

Bitfinex's Response

Bitfinex stated in their blog post on 11/24 that the Washington case is flawed and baseless, and they believe such lawsuits will continue to insult the efforts and dedication of Bitfinex's customers and all participants in the digital currency ecosystem.

Bitfinex takes a firm stance, stating that as predicted, hired lawyers will continue to try to win these cases and get paid, but Bitfinex clearly states:

There will be no form of settlement; instead, we will vigorously contest all claims made in these two lawsuits and ultimately dispose of them at the appropriate time. Once the judgments are determined, Bitfinex and Tether will conduct a comprehensive evaluation of those claimants who have filed baseless claims and consider legal action.

The U.S. Department of Justice has been investigating market manipulation charges for some time but has not made any conclusions public yet. The victory of either side in terms of their arguments remains pending until a true judgment is reached.

Further Reading

• What impact will a USDT collapse have on Bitcoin?
• Research shows a surge in millionaires globally as countries print money, further highlighting the scarcity of Bitcoin

Join now to receive the most comprehensive information on fintech, blockchain updates, and industry examples!