Tether and affiliate exchange group iFinex have called for a market manipulation suit to be dismissed – partly, they say, because plaintiffs don’t prove that billions of dollars of unbacked stablecoins did actually enter the market.
- Lawyers for Tether and iFinex – the parent firm of the Bitfinex exchange – filed a motion Thursday calling for a class action accusing them of deceptive, anti-competitive and market-manipulative behavior to be dismissed with prejudice.
- Claiming they had lost money as a result, the plaintiffs alleged in a complaint last October that over five years Tether issued as much as $3 billion-worth of unbacked USDT tokens, which Bitfinex then used to purchase cryptocurrencies on the open market to prop prices up during market downturns.
- Per the complaint, this allegedly caused the total market cap of cryptocurrencies to skyrocket to $795 billion in late 2017.
- The plaintiffs are five crypto traders who allege that they bought cryptocurrencies at inflated prices and, therefore, incurred monetary losses. As a class action, the suit represents anyone in the U.S. who might also have been injured by inflated prices.
- But in a supporting memorandum, the defendants' lawyers argue the case falls down partly because the accusation Tether printed its USDT stablecoins without any actual backing is based on "unfounded allegations," rather than direct knowledge of the matter.
- They also argue the plaintiffs have not demonstratively shown that cryptocurrency prices were indeed artificial at the time in question.
- This means, according to the memorandum, that accusations of market manipulation and RICO conspiracy should be thrown out because plaintiffs can't prove they actually suffered a monetary loss at the hands of the defendants – a pre-requisite in the U.S.
- Allegations of anti-competitive and monopolistic behavior should also be thrown out because the class action doesn't show how defendants tried to claim a dominant market position by raising prices or restricting output, the memorandum reads.
- iFinex and Tether are battling two other separate cases on similar accusations that USDT isn't properly backed by collateralized reserves.
- These include one suit brought by the New York Attorney General's office in April 2019.
- According to market data site CoinGecko, Tether has a circulating supply of over 10 billion USDT, which are aimed to maintain a value of $1 each.
- Tether's website lists as "proof of funds" a letter from Washington-based law firm FFS, an affirmation that the company held $2.538 billion as of June 1, 2018.
- The company states, however, that USDT is "backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities."
Read the memorandum in full below: