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The multi-million dollar firm behind the controversial stablecoin known as Tether (USDT) is back in the news again. This time Tether Limited is being accused of being a part of a “fraud,” “pump-and-dump,” and “money laundering” scheme in a new lawsuit.
Like a crashing rocket, the crypto community was dealt a big blow earlier in the week when news surfaced of an ongoing class action lawsuit, which claims that the renowned crypto firm (alongside its affiliated company Bitfinex) is holding the key to what could pass as the biggest cryptocurrency bubble of all times.
This comes some months after the company was dragged for lying to the general public that its stablecoin is completely backed by the United States’ official currency – the U.S. dollar. Following the accusation, Tether Limited revealed that the stablecoin is only partially backed by the USD. As a matter of fact, only 74% of the stablecoin is, indeed, backed by the USD.
You won’t be wrong if you said that this leaves room for a number of questions. Well, crypto traders and other crypto investors have teamed up to create what may be the largest crypto lawsuit yet, accusing the firm of conspiring with its sister company, Bitfinex, to manipulate the crypto market.
Although the case is yet in motion, news gathered explained that the crypto firm colluded with Bitfinex to manipulate the crypto market by issuing unbacked dollar-denominated tokens, and thus creating what has to be the biggest bubble yet.
The lawsuit, which was filed at the New York District Court states:
“This action concerns a sophisticated scheme that co-opted a disruptive innovation—cryptocurrency—and used it to defraud investors, manipulate markets, and conceal illicit proceeds… Part-fraud, part-pump-and-dump, and part-money laundering, the scheme was primarily accomplished through two enterprises—Bitfinex and Tether—that commingled their corporate identities and customer funds while concealing their extensive cooperation in a way that enabled them to manipulate the cryptocurrency market with unprecedented effectiveness.”
Citing a study published last year by the University of Texas, the lawsuit categorically stated that Tether Limited teamed up with Bitfinex to manipulate the prices of Bitcoin(BTC)trade and other virtual assets by artificially creating “as much as half the growth in the cryptocurrency market.”
Tether was quick to counter the claims, stating that it anticipated this move for a while now. Describing the lawsuit as meritless and the plaintiff’s counsel as “mercenary lawyers,” the crypto firm strongly condemned the claims and swore to fight the case to the last.
We hope to bring you more gist as the case unravels in court. Stay glued!