{"id":19196,"date":"2019-10-07T18:35:42","date_gmt":"2019-10-07T18:35:42","guid":{"rendered":"http:\/\/ci027cfe66900926c3"},"modified":"2019-10-07T18:35:42","modified_gmt":"2019-10-07T18:35:42","slug":"bitfinex-tether-subject-to-trillion-dollar-class-action-lawsuit","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/bitfinex-tether-subject-to-trillion-dollar-class-action-lawsuit","title":{"rendered":"Bitfinex, Tether Subject to Trillion Dollar Class Action Lawsuit"},"content":{"rendered":"
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A group of individuals is lobbing a $1.4 trillion class action lawsuit against the company behind Bitfinex and Tether, the latest in the company\u2019s looming legal battles<\/a>.<\/p>\n

David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz and Pinchas Goldshtein, \u201con behalf of all others similarly situated,\u201d the lawsuit states<\/a>, are suing iFinex, the umbrella company for the cryptocurrency exchange and market\u2019s most prominent stablecoin, for orchestrating \u201ca sophisticated scheme that coopted a disruptive innovation \u2014 cryptocurrency \u2014 and used it to defraud investors, manipulate markets, and conceal illicit proceeds.\u201d<\/p>\n

Bitfinex and Tether\u2019s Alleged \u201cPump and Dump\u201d<\/h2>\n

In sum, the suit claims, the company violated Sherman Antitrust Act laws with a monopoly on the stablecoin business, cornering \u201cmore than 80 of the market\u201d; engaged in market manipulation in violation of the Commodity Exchange Act; and ran a racketeering scheme as defined by the Racketeers Influenced and Corrupt Organizations Act.<\/a><\/p>\n

Bitfinex and Tether, the suit says, commingled business and customer funds to pump and dump the bitcoin market and launder money. That Bitfinex and Tether have blended customer deposits with business funds was partly the focus of the N.Y. Attorney General\u2019s own legal action<\/a> against the multilayered business after it used customer funds to cover a $800 million hole<\/a> in its finances.<\/p>\n

Essentially, the lawsuit, which was filed by Vel Freedman and Kyle Roche Wright (who also represented Ira Kleiman in a suit against Craig S. Wright<\/a>), plays into the oft-cited conspiratorial narrative that tether, a stablecoin with an alleged one-to-one backing with the USD, is not actually backed by reserves. <\/p>\n

\u201cTether issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices. Because the market believed the lie that one USDT equaled one U.S. dollar, Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created,\u201d the lawsuit reads, with a picture below it depicting Bitcoin\u2019s historic 2017 run-up as measured against other historic asset bubbles, like the regularly-cited Dutch tulip mania.<\/p>\n

Suing Tether and Bitfinex for More Than $1 Trillion<\/h2>\n

This alleged manipulation would mean that Tether\/Bitfinex is essentially printing USDT to inflate bitcoin\u2019s market price to the point of deflation, with this deflation made all the worse due to the company\u2019s alleged manipulation. Since the plaintiffs\u2019 allegedly sustained monetary damages as a result of this “pump and dump,” the suit is seeking over a trillion dollars in damages \u2014 or $400 billion more than all of the assets under management at Goldman Sachs.<\/p>\n

\u201cCalculating damages at this stage is premature, but there is little doubt that the scale of harm wrought by the Defendants is unprecedented,\u201d per the suit. \u201cTheir liability to the putative class likely surpasses $1.4 trillion U.S. dollars.\u201d<\/p>\n

As though in anticipation of this lawsuit, Bitfinex published<\/a> an article on its blog on October 5, 2019, stating that it \u201cis aware of an unpublished and non-peer reviewed paper falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market.\u201d <\/p>\n

The company \u201cvigorously disputes the findings and conclusions claimed by that source,\u201d which Bitcoin Magazine<\/em> could not identify or find at the time of publication.<\/p>\n

The firm either predicted or knew that the lawsuit was coming, adding, \u201cWe fully expect mercenary lawyers to use this deeply flawed paper to solicit plaintiffs for an opportunistic lawsuit, which may have been the true motive of the paper all along. In fact, we would not be surprised if just such a lawsuit will be filed imminently.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The suit claims that Bitfinex and Tether umbrella company iFinex engaged in market manipulation, among other accusations.<\/p>\n","protected":false},"author":2566,"featured_media":19197,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[1961,811],"class_list":["post-19196","post","type-post","status-publish","format-standard","has-post-thumbnail","category-culture","tag-bitfinex","tag-tether"],"author_data":{"id":2566,"name":"Colin Harper","nicename":"colin-harper","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/MjEwMTYzMzc3Njg5ODYzNjQ2-96x96.webp"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitfinex-tether-hit-with-trillion-dollar-lawsuit.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/19196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2566"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=19196"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/19196\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/19197"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=19196"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=19196"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=19196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}