he world's most-used cryptocurrency is again accused of being used to manipulate markets. A class action suit filled last weekend alleges Bitfinex and Tether have manipulated the cryptocurrency market.
The action suit, filled October 6 in New York City, outlines some of the defendants as, Ifinex Inc., Tether Holdings Limited, Digfinex Inc., Crypto Capital Corp., (a payment processor) and Phil Potter, who was the former CSO of Bitfinex. Damages claimed are estimated at 1.4 trillion dollars.
The lawsuit sates that the defendants, "engaged in unfair, deceptive, untrue, or misleading acts." The plaintiffs also claim, "Tether and Bitfinex Defendants have systematically perpetrated deceptive and unfair practices upon members of the public and have intentionally deceived the market."
"Further, the Bitfinex and Tether Defendants’ deceptive practices were consumer-oriented aimed at manipulating the cryptocurrency market and thereby transfer wealth from consumers to themselves,"
The lawsuit also calls out that the Defendants did not disclose that Tether was not backed 1:1 by the US dollar, which became it's own controversy earlier this year.
As for the $1 trillion dollar damages estimate, the lawsuit explains, "Calculating damages at this stage is premature, but there is little doubt that the scale of harm wrought by the Defendant is unprecedented," they continue, "Their liability to the putative class likely surpasses $1.4 trillion US dollars."
The list of alleged infractions by the defending parties was high, with accusations of, "The crimes committed by...their executives include Bank Fraud, Money Laundering; Monetary Transactions Derived From Specified Unlawful Activities, Operating an Unlicensed Money Transmitting Business, and Wire Fraud," according to the suit.
Of course this isn't the first time Tether and Bitfinex have seen the spotlight for alleged financial wrong-doing.
Tether and Bitfinex allegedly covered up almost $1 billion dollars in missing funds from the Bitfinex exchange.
Tether also also admitted in court that they had been using their reserves to buy Bitcoin, and the lawsuit does touch on this as well, "Permanent and irreparable injury will result unless the Tether and Bitfinex Defendants are permanently stopped from issuing unbacked USDT and/or using that USDT and the Bitfinex exchange to manipulate the price of bitcoin."
Both companies finally admitted in spring this year that the [Tether] stablecoin, a type of coin that is pegged to a fiat currency 1:1, wasn't exactly, well, not at all in this case, backed by cash.
"Until at least March 20, 2015, Tether’s website falsely stated that USDT “is backed 100% by actual fiat currency assets in our reserve account and always maintains a one-to-one ratio with any currency held. For example, 1 USDT = 1 USD. With almost zero conversion and transfer fees, [USDT] is redeemable for cash at any time.”
Shockingly, there hasn't been much buzz regarding this lawsuit in contrast to the other controversial stories above and for some valid reason. This class action lawsuit, despite evidence, does seem a bit odd, but more details are sure to come of this.
Nothing seems to come easy for the most-used cryptocurrency world-wide, but with everything that's happened this year, Tether and Bitfinex might just be used it by now.