Tether, Inc., Bitfinex Post Preemptive Response, Fearing Lawsuit
As the New York Attorney General (NYAG) investigation was given the green light to continue, the firms preemptively defended themselves from claims that USDT coins are not backed, and participate in market manipulation.
Tether, Inc. and Bitfinex reacted sharply over the weekend, issuing preemptive statements over a recently presented paper on the activity of the USDT issuer. In the past, academics have noted a strong relationship between the behavior of Bitcoin (BTC) and the activity of the Tether minting wallet.
Now, Tether disputes another paper claiming a similar observation, while adding that its USDT issues are backed by demand and by a portfolio of assets. However, once again Tether omits to claim that all USDT are backed by fiat in a bank. Bitfinex echoed the Tether statement, replacing the company name with mentions of the exchange.
There is currently no lawsuit against Tether and Bitfinex, despite multiple lay accusations and pattern matching. But Tether claimed that such a lawsuit could materialize soon. In its statement, the issuer of the most influential stablecoin noted:
“We fully expect mercenary lawyers to use this deeply flawed paper to solicit plaintiffs for an opportunistic lawsuit, which may have been the true motive of the paper all along. In fact, we would not be surprised if just such a lawsuit will be filed imminently. In advance of any filing, we want to make clear our position that any claims based on these insinuations are meritless, reckless and a shameless attempt at a money grab. Accordingly, Tether will vigorously defend itself in any such action.”
In the days following the statement, USDT has diminished its supply slightly, falling off position four by market capitalization. USDT now takes over 34.92% of all crypto trading, becoming influential both on the BTC and the altcoin markets.
So far, no one has officially attacked the observations that Tether and Bitfinex may have manipulated the BTC market since the summer of 2017, triggering the biggest asset rally in history. The current NYAG investigation is dealing with different issues, mostly regarding clients of Tether and Bitfinex recruited in the state of New York. A court order stopped the NYAG investigation attempt to reveal the backing of USDT.
A lawsuit targeting the issue of market manipulation is seen as potentially shaking up the entire crypto market.