Bittrex and Poloniex have become embroiled in a class-action lawsuit that alleges USDT created out of thin air drove the 2017 bull run.
The plaintiffs behind a class-action alleging that Bittrex and Tether drove the 2017 bull run through market manipulation have requested the issuance of summons to exchanges Bittrex and Poloniex.
The lawsuit, first filed in October 2019, alleges that veteran cryptocurrency exchange Bitfinex and its sister company Tether inflated the supply of Tether’s USDT stablecoin without proper US dollar backing to drive up crypto prices during 2017’s all-time high. The suit is on behalf of investors who purchased crypto assets at what they believe are artificially inflated prices.
The Plaintiffs have requested that the Court award reasonable costs of suit, pre- and post-judgment interest, and reasonable attorneys’ fees.
Bittrex and Poloniex embroiled
The lawsuit claims that Tether “issued billions of USDT to itself with no U.S. dollar backing— simply creating the USDT out of thin air.” The USDT was used to purchase crypto assets causing prices “to spike far above their legitimate value in the largest bubble in human history, and ultimately resulting in billions of dollars of damage to innocent crypto commodity purchasers”.
The amended filing alleges that the altcoin-focused exchanges Bittrex and Poloniex were also in on the scheme, facilitating the coordination of enormous buy orders across multiple exchanges to create the illusion of fresh liquidity flooding into the markets. The complaint states:
“With the willing assistance of Bittrex, Inc. (“Bittrex”) and Poloniex LLC (“Poloniex”), two other crypto-exchanges, Bitfinex and Tether used fraudulently issued USDT to make strategically timed, massive purchases of cryptocommodities just when the price of those commodities was falling.”
The filing notes the exchanges “worked closely with Tether and adopted its guarantee that each USDT is backed by one U.S. dollar” and said that their USDT listings allowed them to quickly rank among the industry’s largest exchanges.
Plaintiff continues to trade
Despite asserting that Tether-fuelled manipulation is rife across the crypto markets, one of the five plaintiffs, Pinchas Goldshtein of Miami, Florida, appears to still be trading.
The amended suit claims that Goldshtein suffered economic losses as a result of purchasing 629 Bitcoin (BTC) futures contracts between January 16, 2018, and June 3, 2020 — suggesting that Goldshtein was making trades on the same day that the filing was submitted.