New complaint has been filed against Tether and Bitfinex over the issuance of unsecured USDT

What’s new? A group of investors in a multi-year class-action lawsuit against the issuer of the largest stablecoin USDT Tether and crypto exchange Bitfinex has filed a new complaint. The document, filed in the US District Court for the Southern District of New York, alleges that the companies manipulated cryptocurrency prices through a scheme involving USDT.

Material by Cointelegraph

What else is known? The plaintiffs allege that Tether and Bitfinex, owned by parent company iFinex, issued unsecured USDT and used it to purchase large amounts of cryptocurrencies classified as commodities. The case was filed back in 2019

The new complaint alleges that Tether and Bitfinex fraudulently inflated the value of cryptocurrencies, including bitcoin, by making massive and carefully calculated purchases that created the appearance of huge demand and caused prices to skyrocket.

According to the plaintiffs, billions of dollars in USDT were spent on these purchases, but the assets themselves, contrary to Tether’s claims, were not fully backed by fiat. They believe Tether and Bitfinex violated the Commodities Exchange Act (CEA) and the Sherman Antitrust Act.

“In reality, Tether issued billions of USDT to itself with no US dollar backing — simply creating the USDT out of thin air, ultimately result[ed] in billions of dollars of damage to innocent crypto commodity purchasers,” the document says.

Last year, the defendants attempted to challenge the plaintiffs’ attempts to amend the lawsuit. Tether and Bitfinex representatives claim the new complaint is an attempt to restart the crumbling lawsuit:

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

In 2021, Finex asked the New York Supreme Court to refrain from releasing to the media and other organizations information about the state and structure of USDT reserves over the past several years. Because the disclosure would have created an unfair competitive disadvantage for Tether. However, in 2022, the court enjoined Tether from withholding information about USDT collateral.

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In September 2022, Tether agreed to provide the court with financial statements about USDT. The company called this procedure a “routine” and emphasized that compliance with the court’s requirements does not confirm the plaintiffs’ unfounded claims against the company.

USDT ranks third in the overall ranking of cryptocurrencies by market capitalization, behind only BTC and ETH with $112,88 billion. Since the beginning of the year, the asset’s capitalization has grown by 24%.

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This year, Tether became a partner in the free economic zone of the emirate of Ras Al Khaimah and also began participating in the process of creating cryptocurrency legislation in El Salvador and Uzbekistan.