Plaintiffs file new, slimmed-down lawsuit in class action against Tether

Plaintiffs in an ongoing class action lawsuit against Tether and Bitfinex have filed a new, slimmed-down lawsuit accusing the crypto companies of manipulating crypto markets and violating antitrust laws.

The second amended complaint, filed on Monday in the Southern District of New York (SDNY), accuses Tether and its sister crypto exchange Bitfinex of operating a “sophisticated scheme to artificially inflate the price of cryptocurrencies” by pushing Tether’s dollar-backed stablecoin USDT into the crypto market without it being fully backed by U.S. dollars, thereby “creating the illusion of increased demand” for cryptocurrencies, “facilitating trading of (cryptocurrencies) on credit and with borrowed funds,” and ultimately driving up crypto prices.

The lawsuit is the third filed in the same case. U.S. District Judge Katherine Polk Failla is overseeing the lawsuit. The first lawsuit was filed in 2019 and an amended lawsuit followed in 2020.

In the latest version of the complaint, plaintiffs’ attorneys asserted three causes of action against the defendants – violation of the Commodities Exchange Act (CEA) through market manipulation, monopolization, and restraint of trade agreement – the latter two causes of action both alleging violations of the Sherman Antitrust Act. It is a watered-down version of the previous complaints: original complaint contained eight pleas in law, and the amended complaint contained 12.

The lawsuit contained chat and statement transcripts from the company’s operators in which they allegedly admitted to manipulative actions.

“(Tether CFO Giancarlo) Devasini also acknowledged in his testimony that issuing a substantial line of credit, ‘not backed by any enormous amount of money,’ would result in customers ‘buying enormous amounts of bitcoin with that counterfeit money and therefore causing the price to rise,'” the lawsuit states.

A Tether spokesperson said the claims in the second amended complaint were “completely without merit, as were the prior complaint.”

“Ultimately, it is the facts and evidence that matter, not the plaintiffs’ false and misleading claims,” ​​the Tether spokesperson said. “We remain confident that we will prevail in this litigation and that the plaintiffs’ nonsensical conspiracy theories will be refuted.”

Last year, lawyers for Tether and Bitfinex filed a Letter of objection opposed the plaintiffs’ motion to amend their complaint a second time, calling it “in effect a motion for permission to start over” after the discovery process was completed. However, in June, Failla finally granted the plaintiffs’ motion for permission to file a second amended complaint.

The lead plaintiffs in the case are U.S.-based crypto traders Matthew Script, Benjamin Leibowitz, Jason Leibowitz and Pinchas Goldshtein, although several other civil class action lawsuits and their plaintiffs have also joined the case.

Attorneys for the plaintiffs did not respond to CoinDesk’s request for comment.