Tether Case Heats Up: Plaintiffs Update USDT Scheme Allegations

Bittime - Plaintiffs in a years-old class action lawsuit against Tether and Bitfinex filed an updated complaint, accusing the companies of manipulating crypto prices through a fraud scheme involving USDT, Tether's dollar-backed stablecoin. Court documents filed in the Southern District of New York reveal these allegations.

Allegations of Crypto Price Manipulation

The complaint accuses Tether and Bitfinex of having “executed a sophisticated scheme to fraudulently inflate the prices” of cryptocurrencies, including Bitcoin, through “massively timed purchases […] to signal to the market that there was strong demand.” very large and thus causes the price of these commodities to soar.”

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The companies allegedly funded these purchases with billions of dollars in USDT, which — contrary to repeated assurances by Tether — was not backed individually by the United States dollar. In doing this, the plaintiffs claim that Tether and Bitfinex violated the Commodity Exchange Act (CEA) and the Sherman Antitrust Act.

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Allegations of Issuance of USDT Without Dollar Recommendation

“In reality, Tether issued billions of USDT to itself without any U.S. dollar reserves — simply creating USDT out of thin air,” according to the complaint, which further alleges that this fraud “ultimately resulted in billions of dollars in losses for innocent purchasers of crypto commodities.”

A match from Tether and Bitfinex

This is the third complaint filed in the case, which opened in 2019 and has since faced repeated delays, including the removal of the plaintiff's original attorney in 2022. Tether and Bitfinex challenged the plaintiff's request to amend the complaint in 2023, calling it a last resort to revive a failed case.

“The reason for this dramatic change is clear: two years of fact discovery — including more than a million pages of discovery documents and numerous [...] depositions — have not revealed a single piece of evidence supporting the market manipulation scheme alleged in the [Complaint],” the parties argued defendant.

Expert Analysis and Suspicious Trading Activity

The plaintiffs assert that “expert analysis shows that Bitfinex and Tether issued unbacked USDT and used the weakened USDT to purchase large amounts of crypto commodities” in the filing. An exhibit from the updated filing highlights suspicious trading activity on the Bitstamp exchange.

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Conclusion

The heated Tether case adds to tensions in the crypto world, with plaintiffs continuing to renew their accusations against Tether and Bitfinex. With these renewed complaints, the future of stablecoins and the integrity of the crypto market continues to be under the spotlight.

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