Bitfinex and Tether slammed with second ‘copycat’ lawsuit

Under-fire cryptocurrency exchange Bitfinex and sister company Tether received a nasty surprise on Friday.

According to a Bitfinex blog post, a second Bitfinex/Tether lawsuit was filed against them “without notice to us”.

The British Virgin Islands-registered exchange once again denies any wrongdoing, insisting that there will be no settlements and that all claims against them will be “vigorously contested”.

The second Bitfinex/Tether lawsuit in six weeks

The second class-action complaint was filed on Friday November 22 in the US District Court for the Western District of Washington.

According to Bitfinex, this “copycat” lawsuit is as equally flawed as the first one filed by Roche Freedman on October 6. The exchange calls the claims of market manipulation “without merit” and “bogus”.

The companies insist that “mercenary lawyers” continue to try to use Bitfinex and Tether to obtain “a payday”, adding: “To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course.”

What is the lawsuit about?

This second Bitfinex/Tether lawsuit is almost a carbon copy of the first, which accuses Bitfinex of using Tether to manipulate Bitcoin price in 2017, leading to its rally. Moreover, Tether’s claims that it is 100% backed by USD have been called into question.

Both companies – owned by parent company iFinex – unequivocally deny these claims, calling the lawsuits and evidence “foundationally flawed”, adding that:

“Bitfinex and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing.”

Bitfinex also asserts that: “All Tether tokens are fully backed by reserves and are issued and traded on Bitfinex pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets.”

Bitfinex maintains that it is “irresponsible” for these actions to suggest that Tether or Bitfinex enable illicit activity since Tether is one of the most trusted and widely accepted stablecoins contributing to “the efficiency, liquidity, and wide-scale applicability” within the cryptocurrency economy.

A recent study by LongHash supports Bitfinex and Tether’s claims

Last week, cryptocurrency data analysts LongHash released a study supporting Bitfinex and Tether’s claims. The study states that Tether manipulation did not cause the 2017 Bitcoin bull run. It concludes:

“We find the current evidence that Tether is manipulating Bitcoin prices to be lacking.

“Furthermore, our original research suggests Tether’s potential influence on Bitcoin prices to be maximal during bear, not bull, markets.

“As more and more stablecoins enter the marketplace, some of the controversies surrounding Tether may also gradually dissipate.”

What happens next?

With differing studies and two class actions against them, it’s certainly not the best of times for iFinex and its operating companies. Indeed, Bitfinex’s UNUS SED LEO token has failed to gain traction, possibly hampered by swirling accusations.

In fact, Bitfinex notes in its post that the “absurd and groundless accusations are an attack on the growth, success, and innovation of the entire digital token ecosystem, in which Bitfinex is proud to play a critical role”.

The company assures the community that it will continue to fight against the “meritless lawsuits”, and once they are overturned, will “fully evaluate their legal options against those bringing and promoting the baseless claims”.