A new complaint accuses the owners and companies behind the Tether cryptocurrency of market manipulation. The accusations claim that Tether is the main culprit for “the largest bubble in financial history,” with over $265 billion worth of cryptocurrencies disappearing from the market.
A handful of investors filed the complaint in the U.S District Court for the Southern District of New York. According to investors who made the accusations Tether, despite being a stablecoin, successfully manipulated Bitcoin’s price. Furthermore, Tether organization is also owning the Bitfinex crypto exchange, meaning that the companies behind the exchange can place Bitcoin buy orders with unbacked by fiat Tether tokens.
Tether is supposed to be fully fiat-backed, but Tether owners implied that they could use other forms of assets to support Tether’s price. Unbacked buy orders can push trading volumes and “pump up” Bitcoin’s price.
„Such lawsuits are actually bringing unprecedented transparency to Tether. Those cases are for the better future of the entire crypto space”, Emin Gun Sirer, an associate professor at Cornell University, stated on Twitter. Tether, on the other hand, responded to the accusations, saying that “such meritless and mercenary lawsuits are a logical consequence.”
“Tether and the companies affiliated with the stablecoin never used the USDT to manipulate crypto market prices,” says an official announcement made by the company.
The plaintiffs alleged financial damage due to market manipulation. Tether is also accused of racketeering and investor defrauding.
“As an early investor in Bitcoin since 2013, I think such acts only stunt consumer confidence and development in the crypto sector,” David Leibovitz wrote in an email. Leibowitz is the leading plaintiff against Tether.
The controversial stablecoin is no stranger to legal lawsuits. In April, the companies behind Tether and Bitfinex received accusations by the New York Attorney General for the loss of over $850 million in client and corporate funds. The list of defendants is significant, including iFinex Inc, Tether Holdings Ltd., Tether Ltd., Crypto Capital Corp., Global Trade Solutions, and others.