Bitfinex and its sister company Tether (USDT), are some of the most controversial companies that exist in the crypto industry. They’ve been accused of market manipulation, and defrauding, and are also involved in multiple lawsuits. A recent report from Binance research showed that 43.3% of the survey participants considered Tether on-going legal issue as a potential risk for institutional investors.
Both the parties have been involved in a lawsuit with the New York Attorney General’s (NYAG) office since April 2019. General Letitia James accused Bitfinex of covering up a sum of $900 million, which according to Bitfinex was lost due to their Panama – based payment processor Crypto Capital. According to the NYAG’s office, Bitfinex engaged in a series of transactions with its affiliate Tether to fill up the gap in the books. The filing stated:
“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds.”
Another class-action lawsuit that was based on various allegations against Bitfinex and Tether that includes the NYAG’s case alongside a study that accused Tether of being used as a market manipulation tool was filed later. The law-suit demanded a fine of $1 trillion to cover the damages caused by the accused.
This Law-suit was filed by David, Benjamin, Jason, and Aaron Leibowitz, as well as Pinchas Goldshtein, and they are represented by Vel Freedman and Kyle Roche, the lawyers who recently won a federal case against Craig Wright. An excerpt from the filing states:
“The crimes committed by Tether, Bitfinex, Crypto Capital, and their executives include Bank Fraud, Money Laundering; Monetary Transactions Derived From Specified Unlawful Activities, Operating an Unlicensed Money Transmitting Business, and Wire Fraud.”
Tether denied all these acquisitions against it claiming “Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing. All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets. It is irresponsible to suggest that Tether enables illicit activity due to its efficiency, liquidity and wide-scale applicability within the cryptocurrency ecosystem.”
Recently, it was reported that a lawsuit was filed against both the companies on November 22, without any advanced notice. According to the accused, the recent claims states that the new report “suffers from the same multitude of deficiencies,” and makes claims that are “similarly without merit” and is something that is based on what it is considered to be “bogus research.”
The companies consider this an “attack on the growth, success and innovation of the entire digital token ecosystem,” where it considers that it plays a very “critical role.” They warned that all these claims would be battled and the ‘mercenary lawyers’ won’t be allowed to reach any kinds of settlements. The announcement stated:
“Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course. Once they are, Bitfinex and Tether will fully evaluate their legal options against those bringing and promoting the baseless claims.”
The accused strongly denies all acquisitions against it yet again and concluded with the fact stating:
“Bitfinex and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing[It is irresponsible to suggest that Tether or Bitfinex enable illicit activity due to the efficiency, liquidity and wide-scale applicability of Tether’s products within the cryptocurrency economy.”