On January 10, 2020, one of the lawsuits against Tether and Bitfinex was withdrawn by the plaintiffs. The case withdrawn was filed on November 22, 2019, by Eric Young and Adam Kurtz against iFinex, the parent company of Tether and Bitfinex, for alleged market manipulation.
The plaintiffs purported that Bitfinex and Tether distributed false info and conspired to monopolize the BTC market. They also blamed the defendants for manipulating the crypto market by issuing unbacked tethers.
This lawsuit was based on the previous case of the Attorney General of the State of New York, Letitia James, who accused the two companies of placing on the market a certain amount of USDT, which did not correspond to the declared reserves in order to hide missing funds.
Young and Kurtz accused Bitfinex and Tether of creating and introducing USDT into the market when BTC prices were falling in order to increase the price artificially.
It is not yet known why the plaintiffs have decided to withdraw the lawsuit, but at this point, Bitfinex’s denial of market manipulation last month appears much more credible.
A Single whale on Bitfinex Likely Manipulated BTC Price
John Griffin, a professor at the University of Texas and Amin Shams, an assistant professor at the Ohio State University, have jointly updated a paper they first published in 2018, alleging that a single whale on Bitfinex moved BTC prices in 2017.
The 2 U.S researchers examined stable coin tether (USDT), and BTC trades from March 1 to March 31, 2018, concluding that BTC purchases on Bitfinex grew every time bitcoin’s value fell by certain increments.
In their initial paper, Griffin and Shams argued that USDT was used to stabilize and manipulate BTC prices in March 2017.
That prompted Bitfinex to reject the allegations, with its CEO JL van der Velde remarking:
“Bitfinex nor Tether is, or has ever engaged in any sort of market or price manipulation.”
Tether Attempting to Shake Off Bad Reputation
While Tether has regularly tried to prove that the appropriate amount of dollar holding backs its token offering, controversial reports against the firm have continued to appear.
For example, in August last year, research by Augmento showed that a forward association between Tether sentiment, market capitalization, and the price could be manipulated to create an arbitrage.