Tether and Bitfinex Accused of USDT Market Manipulation in Major Lawsuit

    
• An ongoing lawsuit has plaintiffs accusing Tether and Bitfinex of artificially influencing cryptocurrency prices using USDT.

    

• The legal complaints highlight multiple alleged violations, including the Commodities Exchange Act and the Sherman Antitrust Act.

    

• A statement from the legal document suggests that Tether and Bitfinex conducted covert operations to skew market demand and pricing.

Accusations against Tether and Bitfinex spark controversy in the crypto market. Read on for an in-depth analysis of the allegations and their potential impact.

Class-Action Lawsuit Against Tether and Bitfinex: An Overview

In a case filed in the Southern District of New York, plaintiffs allege that Tether and Bitfinex manipulated the crypto market using their stablecoin, USDT. The complaint accuses the companies of executing large, strategically-timed purchases to create the illusion of high demand, thereby inflating cryptocurrency prices.

Details of the Allegations

The plaintiffs contend that Tether and Bitfinex’s actions were misleading and violated multiple federal regulations. Specifically, the complaint argues that contrary to the companies’ claims, USDT was not backed one-to-one by U.S. dollars. Instead, the firms are accused of injecting billions of unbacked USDT into various cryptocurrencies, thereby artificially boosting their prices.

Legal Ramifications and Historical Context

This lawsuit represents the third amendment in a complex legal battle that began in 2019. Notably, the case has faced numerous complications, including the replacement of the plaintiffs’ original legal team, Roche Freedman, due to controversies over frivolous lawsuits. Despite these challenges, Judge Katherine Polk Failla has allowed the case to proceed, demonstrating its intricate legal nature.

Market Impact and Tether’s Future

Amidst these legal challenges, Tether’s market share on centralized exchanges has decreased significantly. Reports indicate a fall from 82% to 74% in 2024, reflecting declining trust among traders. Visa’s on-chain analytics show that Tether had an average supply of $115.17 billion in July, dwarfed by Circle’s USDC average supply of $33.46 billion. In light of these developments, Tether has also announced plans to halt USDT redemptions on major blockchains by September 2025.

Conclusion

The allegations against Tether and Bitfinex underscore unresolved issues in the cryptocurrency market’s regulatory landscape. With multiple lawsuits and regulatory scrutiny, the future of Tether and its market dominance remains uncertain. Investors and stakeholders should stay informed as this high-stakes legal drama unfolds, potentially setting precedents for future crypto market regulations.