Affiliate exchange group iFinex and Tether have asked for a market manipulation suit to be dismissed. This is partly because they claim that the plaintiffs have no proof that billions of dollars worth of unbacked stablecoins were released in the market. In a motion filed on Thursday, lawyers for Tether and the parent company of the Bitfinex exchange, iFinex, called for the dismissal of a class-action lawsuit with prejudice, which accuses them of anti-competitive, deceptive, and market-manipulative behavior. In a complaint that was filed last October, the plaintiffs claimed that they had lost money because Tether had issued as much as $3 billion worth of unbacked USDT stablecoins during the course of five years.
They said that the tokens had then been used by Bifinex for purchasing crypto in the open market, which had propped up prices during the market downturn. As per the complaint, this move caused the total market capitalization of cryptocurrencies to skyrocket in late 2017 to reach a whopping $795 billion. The plaintiffs are basically five crypto traders and they claim that they purchased cryptocurrencies at inflated prices due to which they had to incur monetary losses. Since the lawsuit is a class action, it represents anyone in the United States who may also have been injured because of the inflated prices.
However, it is argued by the defendants’ lawyers in a supporting memorandum that the case partly falls down because the accusation against Tether of printing USDT stablecoins without any kind of backing hasn’t been made with any direct knowledge of the matter and is just an ‘unfounded allegation’. The lawyers also argued that the plaintiffs weren’t able to demonstrate that crypto prices were indeed artificially inflated at the specified time. According to the memorandum, this means that accusations of RICO conspiracy and market manipulation should be thrown out because the plaintiffs are unable to prove that they suffered a monetary loss because of the defendants.
This is a prerequisite in the United States. The memorandum said that allegations of monopolistic and anti-competitive behavior should also be thrown out because the class action is unable to show how the defendants tried to establish a dominant position in the market by restricting output or raising prices. Tether and iFinex are fighting two other separate cases that have similar accusations of USDT not being backed properly by collateralized reserves. These include one suit brought in April 2019 by the office of the New York Attorney General.
CoinGecko, the market data site has revealed that the circulating supply of Tether has exceeded 10 billion USDT and each of them carries a value of $1 each. A letter from FFS, a Washington-based law firm, is listed as ‘proof of funds’ on Tether’s website. This is an affirmation that as of June 1st, 2018, Tether held a sum of $2.358 billion. However, the company states that USDT is backed by their reserves, which include traditional cash and cash equivalents and sometimes, may also include receivables from loans and assets made by them to other parties.