Crypto exchange Bitfinex and its sister firm, stablecoin issuer Tether, have again been accused of working to manipulate the bitcoin markets.
A new class-action suit, filed by Eric Young and Adam Kurtz at the district court in the Western District of Washington on Nov. 22, draws heavily from details that emerged in the case brought by the New York attorney general in April against the same two firms.
It's also the second class action to have been brought in recent months relying on the New York case, which is still ongoing as the defendants appeal over whether they must continue to produce documentation. The attorney general claims, among other things, that that the tether (USDT) stablecoin was not fully backed by U.S. dollars.
In a lengthy list of claims, Young and Kurtz specifically allege that Bitfinex and Tether "monopolized and conspired to monopolize the Bitcoin market," as well as manipulated the market, manipulated information or made inaccurate claims.
Further, "Defendants’ misconduct caused prices of Bitcoin futures, and the prices of Bitcoin underlying the Bitcoin futures, to be artificial during the Class Period [Oct. 1, 2014 to present]," Young and Kurtz say, adding:
Both lawsuits also cite a study authored by professors at the University of Texas at Austin claiming that a single Bitfinex account used USDT to inflate the price of bitcoin in the lead up to its 2017 all-time high of around $20,000.
While the case has been brought at the federal court in Washington State, Young and Kurtz are based in Pennsylvania and New York, respectively. Both say they are bitcoin traders who traded at artificial prices due to the alleged actions of the defendants.
"At all relevant times, Defendants, including the employees that conducted Defendants’ affairs through illegal acts, knowingly and intentionally made false statements to U.S. Bitcoin investors and the public for the purpose of concealing Defendants’ scheme," the suit states, further alleging that the defendants profited at plaintiffs' expense.
Bitfinex took to its blog Sunday to call the Washington case "mercenary and baseless," and suggest that such lawsuits "are a continuing affront to the efforts and dedication of Bitfinex's customers and all participants in the digital currency ecosystem."
"As we predicted last month, mercenary lawyers continue to try to use Bitfinex and Tether to obtain a payday. To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course," the exchange wrote.
The U.S. Department of Justice has reportedly looking into the allegations of market manipulation for some time, but has not yet made any conclusions public.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.