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New lawsuit accuses Bitfinex, Tether of participating in part-fraud, part money laundering schemes



On 7 October, Roche Freedman, the New York-based high-stakes legal firm, dragged Tether and Bitfinex to court, alleging them to be participants in market manipulation. A class-action lawsuit was filed by Roche Freedman LLP against Tether and Bitfinex for manipulating cryptocurrency markets. The document filed stated that the “part-fraud, part-pump-and-dump and part-money laundering scheme” was accomplished through – Bitfinex and Tether. The lawsuit additionally alleged,

“Their liability to the putative class likely surpasses $1.4 trillion U.S. dollars.”

The Founding Partner of the firm, Kyle Roche, took to Twitter to share the news,

The official lawsuit accused Tether and Bitfinex of carrying out a “sophisticated scheme” for defrauding investors, manipulating markets, and concealing illicit proceeds. Going against the decentralized nature of the crypto-ecosystem, the lawsuit also claimed that Bitfinex and Tether “concealed their extensive cooperation in a way that enabled them to manipulate the cryptocurrency market part-fraud, part-pump-and-dump, and part-money laundering.”

The document alleged that Tether artificially inflated demand by printing (unbacked) 2.8 billion USDT, creating “the largest bubble in human history.” It further highlighted,

“When it burst, over $450 billion of value disappeared in less than a month. The fallout continues to affect the cryptocurrency market, including by causing prices to be lower than they would have been but for the manipulation.”

The lawsuit filed also raised questions regarding the backing of Tether. It stated,

“At the heart of this scheme was Tether’s claim “that the number of [USDT] tokens in circulation will always equate to the dollars in its bank account.” This claim enabled Bitfinex and Tether to signal to the market that there was rapidly growing demand for cryptocurrencies because each USDT printed represented another U.S. dollar invested into the market.”

Interestingly enough, Tether and Bitfinex had publicly admitted on 5 October about the possibility of being sued. The statement said that the two companies expected “meritless and mercenary lawsuit based on Bogus Study.”

In response to Bitfinex and Tether’s statement, the lawsuit stated,

“Bitfinex and Tether published statements where they generally described the allegations contained herein, admitted that they “fully expect” to be sued, and stated that they “would not be surprised if just such a lawsuit will be filed imminently.”

According to the lawsuit filed by Roche Freedman LLP, the two companies’ response was made only after being “fully aware of the incredible harm they’ve inflicted on the cryptocurrency market.”

The plaintiffs named in the lawsuit include David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz, and Pinchas Goldshtein individually, and on behalf of all others. This action was filed against iFinex Inc., BFXNA Inc., BFXWW Inc., Tether Holdings Limited, Tether Operations Limited, Tether Limited, Tether International Limited, DigFinex Inc., Philip G. Potter, Giancarlo Devasini, Ludovicus Jan van der Velde, Reginald Fowler, Crypto Capital Corp., and Global Trade Solutions AG.


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Tether Have Been Slapped With Yet ANOTHER Lawsuit



It’s safe to say that Tether had had one hell of a year.

It’s been lawsuit after lawsuit and it doesn’t seem t be getting any better as earlier this week, the leading stablecoin was slapped with another sepena for lawsuit, just adding to the woes of the companies experience in 2019.

This time around, Tether has been accused of deliberately manipulating the market for its own benefit and while it adds that “calculating damages at this stage is premature” it estimates around $1.4 trillion in damages.

Even so, the firm doesn’t seem fazed by such a lawsuit and must have a trick up its sleeve to get out of such a fiasco. However, the company has gone on to mint two new transactions worth about $32 million.

Both transactions took place at about eight hours on the same day with the first one being worth $20 million and the second ranging at around $12.4 million. Such transactions aren’t the biggest Tether has ever seen, no – but the timing is enough to trigger harsh words from an emerging industry.

On top of this, it’s worth noting that this could all in fact relate to bitcoin. It’s been picked up on by a few people that fresh USDT mints pumped price activity. Furthermore, it’s been noted that this correlation can also be seen between bitcoin and Tether’s 30-day moving average.

As reported by ZyCrypto:

“The recent USDT pumps also seemed to correspond with BTC at the time. BTC has been trading quite disappointingly after it fell below the $8,000 mark recently. However, prices reached and crossed the $8,200 mark around the same time these Tether pumps were recorded.”

Tether’s noteworthy price pumps have gone down over the year though. Mainly ever since its cover-up case with the New York Attorney General. Despite this, printing has not definitely been stopped, instead, they are done in a much lighter round and aren’t tied down for long, but almost immediately spread.

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DAI addresses continue to surge; record 27% monthly growth since May



The importance of stablecoins such as Tether has gradually risen in the industry over the past few years, with these fiat-backed digital assets currrently occupying a substantial part of the total market cap.

MakerDao’s Dai is one such stablecoin and it has been recording a very positive 2019. According to MakerDao’s recent Q3 report, over the past quarter, activity in the DAI ecosystem has increased by over 4 times.

Back in May 2019, the monthly high of active addresses reported was around 16,000. In September, the active addresses figure skyrocketed to more than 66,000 addresses, which is a signficant increase in a span of just 4 months. It was also observed that the adoption metric, a measurement that looked into how many addresses held atleast 1 DAI, had steadily increased by around 25 percent every month.

Source: Maker Dao

It can be observed from the chart above that the active addresses did not exhibit a steep increase until June, following which the stablecoin recorded a growth of 109,000 addresses. Coinbase‘s Earn Dai campaign has been credited for this sharp rise and after analyzing the smart contracts utilized in the campaign, it is believed that 76,000 new addresses joined the Maker protocol, with 43,000 of them being recorded in August alone. At press time, the number of addresses had fallen, but the general idea of DAI among users has been strengthened.

The report also suggested that almost 90 percent of the entire 80 million DAI in circulation was held in wallets, whereas more than 50 percent of it was held in private wallets. 20 percent of the total DAI was utilized in decentralized applications, and the remaining 7 and 6 percent were held in multi-sig wallets and escrow on crypto-exchanges, respectively.

At press time, Rune Christensen, CEO of Maker Foundation, had revealed that the highly anticipated Multi-Collateral Dai [MCD] was set for launch on 18 November. The launch of MCD has been identified as a major milestone for the DAI project and the community is hopeful that it would have a major impact on Decentralized Finance.


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Tether issuance causes Bitcoin to rise in over 70% of cases according to research



Bitcoin price correlation to USDT issuance has been a hot topic of discussion between cryptocurrency investors and traders soon after the birth of the most popular stablecoin in the world. According to calculations from researcher TokenAnalyst, Bitcoin prices increase on 70% of the days when new Tether tokens are issued. The $2 billion in USDT that was issued this year likely contributed significantly to the 2019 increase in Bitcoin value.

Back in April, New York Attorney General accused Tether and its parent companies of covering up losses and co-mingling client and corporate funds. Tether issues its token at whim, with no explanation given other than “to meet orders from larger customers”. In China, where crypto exchanges are banned, most traders obtain USDT via OTCs, which they can then use to trade for Bitcoin or altcoins on larger exchanges.

TokenAnalyst found that issuance on the Ethereum blockchain as ERC-20 tokens saw the price of Bitcoin move up 70% of the time (19 out of 27 cases), while issuance as Omni tokens saw an increase 50% of the time (12 out of 24 cases). In an Email to Bloomberg, Sid Shekhar, co-founder of TokenAnalyst, said,

“I think the discrepancies are appearing recently primarily because Tether on ERC-20 is just much easier than Tether on Omni to use as a means of transferring value quickly,”“Ethereum is a speedier chain than Bitcoin. As Tether is primarily used as a way to realize gains and get in and out of volatile crypto-asset positions in times of market movement, the speed of transferring into/out of it is critical.”

He also added that traders could leverage this knowledge by tracking the minting and burning of the ERC-20 Tether token.

Analysts also found that the amount of Tether issued on Omni also affects the increase in price, with a correlation of -1.6%. On Ethereum, however, the correlation was calculated to be 15.8%.


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