Tether, Bitfinex granted partial relief in class action lawsuit

Tether recently mentioned on its website that a New York District Court dismissed half of the class action plaintiffs’ claims against it. Along with that, crypto exchange Bitfinex has been granted relief on many of the claims in the class action. However, as per reports, the federal court will continue to pursue claims around alleged market manipulation.

Further, Tether and Bitfinex’s parent company, DigFinex Inc., will face claims for violation of antitrust laws and the Commodity Exchange Act. However, it got relief in civil RICO claims under the Racketeer Influenced and Corrupt Organizations Act. The official order

“Defendants’ motions to dismiss are granted in part and denied in part.”

The lawsuit includes claims of a group of individual investors who purchased crypto-commodities, including Bitcoin. They complained about conspiracies to “artificially inflate” the price of those crypto-commodities. It also includes claims of misrepresentation that USDT was fully backed by U.S. dollars. The plaintiffs alleged that Tether worth billions was issued “out of thin air,” and,

“Plaintiffs allege that Tether and Bitfinex were issuing USDT to themselves.”

The complaint also names some of DigFinex executives for furthering the scheme. The order stated,

“Plaintiffs have plausibly alleged conduct from which the court can draw a reasonable inference of the DigFinex defendants’ intent to control prices, and thus to ‘constrain the market for other buyers and sellers’ of cryptocommodities.”

The complaint also alleged the fraudulent creation of crypto-assets to pump up demand in the market. The class action against the parent DigFinex Inc. was first initiated in October 2019 on the premise of manipulation of the digital asset market and artificially inflating prices. In a recent blog, both Tether and Bitfinex stated that they won’t settle.

“Bitfinex and Tether look forward to litigating this case and won’t settle what remains of the plaintiffs’ baseless claims.”

They have called the claims “a clumsy attempt at a money grab.” The defendants, namely DigFinex and its associated entities, have been directed to file answers to the updated complaint by October 28, 2021.

In a previous complaint earlier this year, Bitfinex and Tether had agreed to pay $18.5 million in damages to the state of New York. The allegations included deception by the entities by overstating reserves and hiding losses of around $850 million. However, they did not admit or deny wrongdoing when they agreed to settle the former complaint.