Crypto exchange Bitfinex plans to file a motion to dismiss a lawsuit over allegations of market manipulation, labeling it “frivolous,” according to a corporate statement.
A class-action lawsuit has been filed against Bitfinex, Tether, and others accusing them of fraudulently inflating the cryptourrency market by printing uncovered USDT tokens. The plaintiffs describe the alleged sophisticated scheme as “the biggest bubble in human history.”
However, as it stands, Bitfinex requests that the entire proceeding be dismissed as the frivolous suit lacks a factual or legal basis, and as such, has little or no chance of being won. The stablecoin printer said plaintiffs’ causes of action has no legal basis to proceed past the very early stage of the case.
A motion to dismiss the suit at the outset might be the proper vehicle, says Bitfinex, as “there are several reasons to look at the Plaintiffs’ claims with a jaundiced eye.”
2020 Global Market Outlook: How the “Known Unknowns” Can Affect CurrenciesGo to article >>
Tether and its affiliate cryptocurrency exchange explained that the accusations largely rely on a concentrated campaign of price manipulation based on an unpublished study on bitcoin’s 2017 boom. Aside from key methodological flaws in the paper, Bitfinex continues, meritless claims were amended to “walk back support for a core allegation of the plaintiffs’ complaint.”
The paper by John Griffin, an academic with a history of spotting fraud in financial markets, and Amin Shams, a graduate student, found that at least half of the increase in the price of Bitcoin and other big cryptocurrencies at the time was attributable to “one large player.”
While the authors suggest those running Bitfinex either knew or even assisted the scheme, the exchange wonders how its flows of tethers manipulated a market that is more than seven hundred times bigger than the amount of total USDTs in circulation.
Should the decision wouldn’t go Bitfinex’s way, it would have to admit or deny the allegations and then undergo a lengthy, expensive process during which it should prove that Bitcoin’s skyrocketing gain wasn’t caused by shady activities on its platform.
Bitfinex executives have denied in the past that the exchange was involved in any manipulation and that Tether issuances cannot be used to prop up the price of Bitcoin or any other coin.