Tue. Jun 28th, 2022

A lawsuit against Tether, for manipulating the Bitcoin market, has now included two cryptocurrency exchanges.

Poloniex and Bittrex Now Part of Tether Lawsuit

Stablecoin issuer, Tether, has been facing allegations for manipulating the Bitcoin market in 2017, leading the cryptocurrency to reach its all-time high of nearly $20,000 per coin. The allegation, which has been dragging on for nearly a year now, has taken a fresh twist.

Crypto Scheme

On Wednesday, cryptocurrency exchanges, Bittrex and Poloniex, were listed as defendants in a lawsuit against Tether. The two exchanges have been accused of fraudulently toying with the price of the cryptocurrency. The plaintiff has been pursuing Tether and Bitfinex since the case started in October last year. However, it seems that Poloniex and Bittrex have now been added to the list of the defendants. The amended suit, consisting of 156 pages, continues to claim that Bitfinex and Tether orchestrated a grand plan that saw them launder and circulate billions of allegedly unbacked USDT coins via the cryptocurrency market, bringing harm to their customers. The customers, in this case, are; Aaron Leibowitz, Matthew Script, Benjamin Leibowitz, Pinchas Goldshtein, and Jason Leibowitz.

Crypto Scheme

According to the plaintiffs, Poloniex and Bittrex were the backdoor channels in the scheme, adding that the two exchanges created wallet addresses mainly for receiving enormous USDT transfers. They further claimed that they knew that Bitfinex was the one sending the USDT coins.

The Crypto Scheme

In their amended lawsuit, the plaintiffs alleged that “Given the size and regularity of these transfers through a mechanism they created for that exact purpose and their perfect visibility into the transactions, Bittrex and Poloniex knew the manipulative effect of the transactions on their exchanges.”

They indicated the USDT inflows as evidence of their claims. For instance, on February 6, 2018, Bitfinex allegedly transferred $2 million of valueless USDT coins to Poloniex, just before the BTC price hit a low price for the day. Following the transaction, a market-wide rally ensued, and the trading volume increased.

The lawsuit added that for the peripheral exchanges, the large trades of supposedly backed USDT coins seemed legit and boosted consumer trust. Thus, leading to an increase in trades and fees for the two cryptocurrency exchanges. The plaintiffs added that the connected entities responded to the news of the day to coordinate their USDT transfer pattern, even after the Tether report was published.

Crypto Scheme

The in-house counsel for Bitfinex and Tether, Stuart Hoegner, commented on the amended lawsuit, calling it not relevant to the facts or the law. The counsel added that the plaintiffs have conflated perceived correlation with causation as they seek to create theories that are false and without support.

Tether and its parent company, Bitfinex, have been accused of manipulating the Bitcoin market for a while now. The two entities are alleged to have inflated the trading volumes of Bitcoin in the wake of its surge to the $20,000 mark in 2017. Since then, the public trust in Tether’s USDT stablecoin has dropped, with other stablecoins coming up as alternatives to exchanges and their customers. However, it is still unclear if Bitfinex and Tether manipulated the market as no conviction has taken place yet.



By Dov Herman

Dov is a Blockchain and Forex trading enthusiast, who spends most of his time trading and examining software who are related to cryptocurrencies and forex trading. You can follow on Dov’s reviews and articles here on TrustedBrokerz and across the web.