A group of individuals is lobbing a $1.4 trillion class action lawsuit against the company behind Bitfinex and Tether, the latest in the company’s looming legal battles.
David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz and Pinchas Goldshtein, “on behalf of all others similarly situated,” the lawsuit states, are suing iFinex, the umbrella company for the cryptocurrency exchange and market’s most prominent stablecoin, for orchestrating “a sophisticated scheme that coopted a disruptive innovation — cryptocurrency — and used it to defraud investors, manipulate markets, and conceal illicit proceeds.”
Bitfinex and Tether’s Alleged “Pump and Dump”
In sum, the suit claims, the company violated Sherman Antitrust Act laws with a monopoly on the stablecoin business, cornering “more than 80% of the market”; engaged in market manipulation in violation of the Commodity Exchange Act; and ran a racketeering scheme as defined by the Racketeers Influenced and Corrupt Organizations Act.
Bitfinex and Tether, the suit says, commingled business and customer funds to pump and dump the bitcoin market and launder money. That Bitfinex and Tether have blended customer deposits with business funds was partly the focus of the N.Y. Attorney General’s own legal action against the multilayered business after it used customer funds to cover a $800 million hole in its finances.
Essentially, the lawsuit, which was filed by Vel Freedman and Kyle Roche Wright (who also represented Ira Kleiman in a suit against Craig S. Wright), plays into the oft-cited conspiratorial narrative that tether, a stablecoin with an alleged one-to-one backing with the USD, is not actually backed by reserves.
“Tether issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices. Because the market believed the lie that one USDT equaled one U.S. dollar, Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created,” the lawsuit reads, with a picture below it depicting Bitcoin’s historic 2017 run-up as measured against other historic asset bubbles, like the regularly-cited Dutch tulip mania.
Suing Tether and Bitfinex for More Than $1 Trillion
This alleged manipulation would mean that Tether/Bitfinex is essentially printing USDT to inflate bitcoin’s market price to the point of deflation, with this deflation made all the worse due to the company’s alleged manipulation. Since the plaintiffs’ allegedly sustained monetary damages as a result of this “pump and dump,” the suit is seeking over a trillion dollars in damages — or $400 billion more than all of the assets under management at Goldman Sachs.
“Calculating damages at this stage is premature, but there is little doubt that the scale of harm wrought by the Defendants is unprecedented,” per the suit. “Their liability to the putative class likely surpasses $1.4 trillion U.S. dollars.”
As though in anticipation of this lawsuit, Bitfinex published an article on its blog on October 5, 2019, stating that it “is aware of an unpublished and non-peer reviewed paper falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market.”
The company “vigorously disputes the findings and conclusions claimed by that source,” which Bitcoin Magazine could not identify or find at the time of publication.
The firm either predicted or knew that the lawsuit was coming, adding, “We fully expect mercenary lawyers to use this deeply flawed paper to solicit plaintiffs for an opportunistic lawsuit, which may have been the true motive of the paper all along. In fact, we would not be surprised if just such a lawsuit will be filed imminently.”
The post Bitfinex, Tether Subject to Trillion Dollar Class Action Lawsuit appeared first on Bitcoin Magazine.
Via: Bitfinex, Tether Subject to Trillion Dollar Class Action Lawsuit
A Blockchain is a growing list of records, called blocks, which are linked using cryptography. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries. Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank.
Blockchain 101 · Crytpo Currency Market
---------------------------------------------------
Trezor: Hardware Wallet
Binance: Exchange for Traders
Ledger Nano S: Hardware Wallet
Coinbase: Exchange for Investors
CoinSwitch: Wallet-to-Wallet Exchange
