Bitfinex, Tether says they’re clean and wants market manipulation lawsuit dismissed

Bitfinex says they’re clean and wants market manipulation lawsuit dismissed

During Bitcoin’s big bull run a few years ago many folks were questioning the organic nature of the price pump. Tether was first available on Bitfinex in January of 2015 while Bitcoin had been on a downslide. But for the next few years, the cryptocurrency markets experienced parabolic growth, leading Bitcoin to a high of about $20k in late 2017.

It has long been rumored in the cryptocurrency world that Tether or USDT was used to manipulate the Bitcoin markets and aided the run-up to $20k. Eventually, the manipulation chatter led to academic studies and the filing of a lawsuit against Bitfinex.

John M. Griffin, a finance professor at the University of Texas with a background in forensics, and Ohio State University finance professor Amin Shams set out to discover if the growth was real or a fabrication by a few whales.

“If it’s not Bitfinex,” Griffin told CoinDesk, “it’s somebody they do business with very frequently.”

“The promise of a decentralized financial system was that it would be free from the influence of banks and governments,” Shams added. “Ironically, there are large, new entities that have gained centralized control.”

Back in 2019, It was found in court filings that Tether had admitted that only 74% of the supply of USDT was actually backed by cash. And Griffin and Shams argue that the issuing of new tether dollars regardless of customer orders and without proper backing led to manipulated prices in the cryptocurrency markets. 

But Bitfinex has fired back aggressively. As soon as the study by John Griffin and Amin Shams was released, the exchange accused the researchers of lacking academic rigor. 

Now Bitfinex is attempting to get the lawsuit dismissed. 

“The motion says that the claims of manipulation is simply a “fantastical tale alleging an elaborate scheme of epic fraud. But innuendo is insufficient to state a claim.”

The Bitfinex motion goes on to state that there isn’t a “single sustainable allegation that the Exchange Defendants—Bittrex, Inc. and Poloneix, LLC—had any knowledge of or role in the scheme.”

Ultimately, Bitfinex says, the allegations rely on the false premise that they owned accounts involved in manipulative trading and that they were fully aware of the depths of the scheme.

Tether has become a mainstay in the blockchain sector. Exchanges and traders rely heavily on the dollar tied asset to facilitate trading and as a haven from volatility. The outcome of this case could have a lasting impact on the entire cryptocurrency space. 

Michael Boris
Michael Is A Blockchain Expert And Proficient Crypto Reporter At CoinJot Media With An Academic Degree In Journalism. Disclosure: He owns less than 1 BTC and less than 4 ETH. Contact: [email protected]