Bitfinex wants $1.4T market manipulation lawsuit dismissed

Bitfinex digital currency exchange wants the market manipulation lawsuit brought against it dismissed. In a motion filed jointly with sister company Tether, the exchange claimed that the plaintiffs based their lawsuit on unfounded allegations and failed to directly tie Bitfinex to the trading accounts accused of manipulation.

The lawsuit was filed in October 2019 by a group of traders, accusing Bitfinex, Tether and Crypto Capital and their executives of bank fraud, money laundering, wire fraud and more. They claimed that Tether printed billions of dollars’ worth of USDT which was used to inflate the price of BTC in 2017. Filed in New York, the lawsuit claimed that the damages incurred from the price manipulation “likely surpasses $1.4 trillion U.S. dollars.”

Now, in a supporting memorandum filed at the Southern District of New York, Bitfinex is seeking a dismissal of the lawsuit.

The exchange claims that the Class Action Complaint (CAC) is based on speculation, “without a single sustainable allegation.” One of the allegations made by the plaintiffs is that Tether lied about its USDT tokens being backed by U.S. dollars in a 1:1 ratio. They further alleged that Bitfinex controlled accounts at two other exchanges—Poloniex and Bittrex—which it used to buy $3 billion worth of BTC, leading to a price surge.

Bitfinex said the plaintiffs’ case rested on two flawed arguments—that it controlled the accounts and that Bittrex and Poloniex were aware that it was using the accounts for market manipulation.

“Plaintiffs do not allege any fact—i.e., no document, no witness, no email, no other communication—suggesting that the Accounts are owned or controlled by Bitfinex. Instead, Plaintiffs ask the Court to infer that the accounts are owned or controlled by Bitfinex based on innocuous facts that do not demonstrate such ownership or control,” the exchange claimed.

Bitfinex also called on the court to dismiss the lawsuit with prejudice, barring the plaintiffs from refiling in the future. The filing claimed that manipulation claims must be brought “not later than two years after the date the cause of action arises.”

The plaintiffs have failed to prove that they suffered actual losses, according to Bitfinex.

While Bitfinex has faced claims of market manipulation for the last three years now, Poloniex and Bittrex were added recently. They are accused of having facilitated the manipulation. In August 2020, the two exchanges filed a motion for summary judgment  in a New York court, claiming the allegations “rest on a demonstrably false factual premise.”

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