Tether, Bitfinex sued for creating the “largest bubble in history”
There was already substantial evidence, dating back two years, that should have raised flags over the activities at Tether, but the latest revelations that have surfaced over the past several months have certainly put the company in adequate light. As more backers began to realize that Tether’s stablecoin project, USDT, may have been anything but stable, it was predicted that a string of lawsuits could be coming. That prediction was made true less than a day later.
A law firm out of New York Roche Freedman, has filed a class-action suit against Tether, and its close ally Bitfinex, for alleged market manipulation, concealment of illicit proceeds and for creating the “largest bubble in history.” The lawsuit reads, in part, that the two entities managed to operate a “sophisticated scheme” that involves “part-fraud, part-pump-and-dump, and part-money laundering.”
There have been a number of accusations thrown around for more than a year that Tether could be behind several rises and falls of the crypto markets, but nothing could ever be proven. It has also been said that the company is trying to hide certain aspects of its operations, given that it has never been willing to produce a legitimate audit performed by an independent firm.
The USDT, when it was first introduced, was billed as a stablecoin that was backed by a U.S. dollar on a one-to-one basis – every USDT had one dollar in an account supporting it. However, this was suspected as false almost from the beginning, and was later confirmed as such by Tether itself when it admitted that the stablecoin was now backed by dollars, assets and other investments.
Proving market manipulation took place isn’t an easy task. However, this is just the latest in a string of questionable activities that, in addition to those previously mentioned, also include Tether’s printing of $300 million in USDT for a supposed swap, even though it later “forgot” to burn the USDT when the swap was complete. That action, coupled with other similar USDT prints, provides the basis for the lawsuit, asserting that they were designed by Tether and Bitfinex “to signal to the market that there was rapidly growing demand for cryptocurrencies because each USDT printed represented another U.S. dollar invested into the market.” The suit alleges that the claim was an outright lie and that the two entities “had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created.”
Tether and Bitfinex have already issued statements proclaiming their innocence and vowing to fight any lawsuit vigorously.
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