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Bitfinex and Tether's Appeal Rejected by New York Judge

Earlier this year, the New York Attorney General’s office has made allegations against Bitfinex of using up Tether’s cash reserves in April 2019. The accusations were made regarding the cryptocurrency exchange of losing $850 million, and thereafter taking funds from Tether’s reserves to cover the loss. The NYAG office started to investigate iFinex Inc, the company was registered in the BVI and owns both Bitfinex and Tether.

In a press release by New York Attorney General Letitia James, she stated:

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

The lawyers of Bitfinex and Tether asked Judge Joel Cohen of the New York Supreme Court to dismiss the case, the main argument is that both firms do not have any clients in the state of New York. It was later on revealed that on July 10, the Metropolitan Commercial Bank of New York shut down accounts associated with Tether.

Photo: Judge Cohen

Judge Cohen reportedly decided to give a 90-day extension to the case, which will give the New York Attorney General’s office to continue investigating. Judge Cohen also dismissed Bitfinex and Tether’s motion to appeal after the ruling.

The Government is Taking Action on Bitfinex, Who’s Next?

Judge Cohen image via Law.com, thumbnail image via Shutterstock

Bitcoin Whales are Controlling the Market

Bitcoin whales have been dominant in the market based on their massive liquidity. Tyler Swope, an expert crypto trader, has the viewpoint that Bitcoin whales have become overly manipulative this summer.

Bitcoin’s choppy price chart

As per Swope’s observation, Bitcoin has witnessed numerous pumps and dumps in a span of two weeks. As a result, a clear manipulation has emerged from nine thousand dollars ($9,000) to eleven thousand dollars ($ 11,000). Notably, whales have been taking advantage of the immediate volatile price swings.

Conversely, Swope reinforces his observation with Sunday’s abrupt Bitcoin price drop. Specifically, an all-day trade was prevailing beyond nine thousand five hundred dollars ($9,500), but an unexpected bear made it drip to nine thousand two hundred and sixty-five dollars ($9,265). Later on, bulls came calling to retrace back to nine thousand five hundred and seven dollars ($9,507). Astonishingly, all this trend happened within an hour.

Bitcoin whales on Bitfinex

Swope found the dump dragging Bitcoin price to nine thousand and one hundred dollars ($9,100) on Bitfinex. Notably, Bitfinex is an exchange that permits margin trading. As a result, the whales in operation instigated a well-orchestrated bear trap. Swope viewed this as a wreaking havoc procedure as different positions were witnessed on this exchange.

The Bitcoin whales on Bitfinex had different intentions such as the urge to liquidate. The other objective entailed luring novice traders into the manipulation that bears were calling. These traders were, therefore, unfortunate to undertake short positions. The Whales had selfish motives as they immediately went into a buying spree. As a result, these traders lost.

Conversely, other flash crashes have existed. For instance, on July 14, 2019, ETH price crashed on Bitstamp, a crypto exchange. As a result, a ripple effect was witnessed on another exchange called BitMEX.

Swope asserted Bitcoin Whales are reigning supreme in crypto exchanges. This is based on their self-interest at the expense of other traders and the market at large.

New York Supreme Court Declares NYAG has Jurisdiction over Bitfinex

The New York State Supreme Court ruled that the New York Attorney General (NYAG) has jurisdiction over the case with cryptocurrency exchange Bitfinex, regarding fraud allegations.

The New York State Supreme Court ruled that the New York Attorney General (NYAG) has jurisdiction over the case with cryptocurrency exchange Bitfinex, regarding the fraud allegations.

IFinex, the company behind Bitfinex and Tether previously appealed to the court regarding fraud and taking funds from Tether to cover up an $850 million loss of funds resulting in the misled of information towards the investors in the state of New York. The NYAG argued that it was too early for the court to address jurisdictional questions during an ongoing investigation.

According to the court filing, the NYAG would be able to carry on with the investigation over the allegations of fraud and misleading investors.

The New York State Supreme Court denied IFinex’s motion to dismiss the NYAG’s lawsuit that would prosecute Bitfinex under the Martin Act. The court decided that it has jurisdiction to rule over the case.

The court has decided that the stay that was in place back in May 2019 has been eliminated. This means that relevant documents must be provided to the NYAG and Bitfinex has less than two months to turn over the documents.

Tether Plans to Issue Stablecoin Backed by Chinese Yuan

Tether has been reportedly working on a new stablecoin pegged to the Chinese Yuan. The stablecoin project named “CNHT” came from the intention of Zhao Dong, one of the shareholders of the Bitfinex crypto exchange.

Zhao Dong’s digital banking business, RerenBit will be supporting CNHT’s trading and deposit services as soon as it is launched.

Zhao also confirmed that he believes that the new stablecoin “will be launched very soon, possibly within weeks.” The new stablecoin’s reserve is expected to be held in a Belgian bank.

The two main benefits explained by Zhao include that it would make Tether less dependent on the US dollar while boosting the circulation of the Renminbi held offshore.

He later added:

“Personally, I think the offshore yuan stablecoin could boost the circulation of offshore Renminbi and internationalize it. Regulators may be happy to see it proceed and succeed.”

Amidst the new stablecoin plans, Bitfinex and Tether are still under an ongoing investigation regarding an alleged cover-up. The NYAG is inquiring into Bitfinex’s loss of access to funds totaling to $850 million and borrowing funds from Tether’s US dollar reserve.

Bitfinex Permitted to Withhold Documents About Alleged $850 Million Cover-up

The Appellate Division of the New York Supreme Court has ruled that Bitfinex is legally allowed to withhold documents pertaining to the alleged cover-up of an $850 million loss on its trading platform.

A court order authorized by court justices David Friedman, Peter Tom, Troy Webber, Ellen Gesmar and Jeffrey Oing has stopped the previous ruling of New York Supreme Court Judge Joel Cohen that required Bitfinex to produce documents and information related to the loss of $850 million from its trading platform.

The story so farIn April 2019, the New York Attorney General’s Office filed a complaint against Bitfinex, parent company iFinex and affiliated stablecoin issuer Tether—alleging that the companies were in violation of New York law in connection with activities that may have defrauded New York-based crypto investors by covering up the loss on the Bitfinex trading platform.

Attorney General Letitia James revealed that her office obtained a court filing which alleged that Tether had given Bitfinex access to $900 million of Tether’s cash reserves through a series of masked corporate transactions. The funds were then used to hide the losses and satiate clients’ withdrawal requests.

James wrote at the time that the Attorney General’s office had determined that, “Operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

Image via Shutterstock

Bitfinex and Tether Face Market Manipulation Class Action Lawsuit

Roche Freedman, New York-based legal firm, filed a class-action lawsuit on behalf of those who own cryptocurrency against Bitfinex and Tether and others for crypto market manipulation and creating the largest bubble in history.

In the class-action suit, the New York-based legal firm alleged that Bitfinex and Tether had been involved in manipulating markets and concealing illicit proceeds, as stated in the tweet by the law firm’s founding partner, Kyle Roche.

The complaint filed with the United States District Court in the Southern District of New York stated that Bitfinex and Tether were involved in a sophisticated scheme to defraud investors. The complaint said that the action concerns a “part-fraud, part-pump-and-dump, and part-money laundering.”

Tether’s asset backing notion debunked

The document further notes that Tether claims “that the number of [USDT] tokens in circulation will always equate to the dollars in its bank account.” However, this claim was a lie, according to Roche Freedman.

The law firm claimed that Tether “issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices. Because the market believed the like that one USDT equaled one US dollar, Bitfinex and Tether had the power to, and did manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created.”

Image via Bitcoin Magazine

Tether Deny Bitcoin Bull Run Manipulation

Reporting on allegations made against Tether’s parent company iFinex, Tether has released follow up comments to deny any wrongdoing in the market.

The USDT backed stable coin quickly published responses stating, Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing. All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets. It is reckless — and utterly false — to assert that Tether tokens are issued in order to enable illicit activity. Tether token issuances have quadrupled since December 2017. This growth is not a product of manipulation; it is a result of Tether’s efficiency, acceptance and widescale utility within the cryptocurrency ecosystem.

Market manipulation has been a constant and overwhelming feature across all crypto markets. Tether, large exchanges, and tokens have all been under severe scrutiny to start publishing internal documents and open up order books to the public.

Griffin and Shams, who have brought this article to the public have been continually researching the marketplace and came to the conclusion a Tether Whale, likely Bitfinex was the main reason behind the Bitcoin price run.

With both sides strongly believing in their figures and stats, it is unlikely any clear picture will show, until Bitfinex, open up their backend accounts.

Image via Shutterstock

Bitfinex Partners with ODEM to Revitalize Crypto Education

Bitfinex, a reputable digital asset trading platform, has joined hands with ODEM, an on-demand education, and employment marketplace, to create a new education model focused on the importance of digital tokens in the blockchain and crypto space.

ODEM will operate and design an innovative token transaction simulation model utilizing Bitfinex as its chief liquidity platform.

Crypto Knowledge Base Expansion

This partnership seeks to develop various courses and programs aimed at propelling the knowledge base of both advanced and novice Bitfinex users interested in gaining more insights about digital tokens’ technical features.

The CTO at Bitfinex, Paolo Ardoino, asserted: “By educating more individuals on the uses and value of cryptocurrency and the vital role it plays in powering the blockchain economy, we are encouraging greater understanding and adoption of digital currencies. We’re confident that through continued, dynamic, and relevant education provided by expert educators on ODEM’s platform, Bitfinex users will receive an advanced service offering.”

On the other hand, ODEM’s CEO, Richard Maaghul, proclaimed: “We’re excited to be the first to market with completely mirrored fiat-to-crypto trades in our education and employment marketplace.”

By leveraging on the crypto education programs, Bitfinex users will attain a holistic view of cryptocurrency trends and markets, as well as gain more insights about how the platform operates.

Image via Shutterstock

US Court to Determine Which Law Firm Should Lead Classic Action Against Tether

Stablecoin issuer Tether, owned by iFinex and its other subsidiary, Bitfinex exchange, is facing charges of allegedly manipulating the price of Bitcoin in 2017. Although the company, on the other hand, is vehemently in denial of the charges leveled against it.

This leaves the court with the responsibility of determining which firm should lead the classic action against Tether. Proceedings in a US courthouse for the Southern District of New York, pass judgment on Katherine Failla heard on Feb. 25, from three plaintiff firms who brought the charges against iFinex et.al. With court set to determine which firms will take the lead in a magnificence motion with more than tens of thousands of aggrieved contributors.

As the legal process to determine who takes the lead gets tense, Kyle Roche, representing plaintiffs Leibowitz et al., submitted that his company Roche Cyrulnik Freedman LLP was once the primary platform to analyze the alleged price manipulation, the primary to record a grievance, and the only one to have in possession a high level of experience in cryptocurrency. Roche stated, “cryptocurrency is exclusive, the legislation is new, and this example gives tricky definitional problems.”

Who is in the right position to sue Tether?

Karen Lerner of Kirby Mcinerney LLP, who represents plaintiffs’ Younger, Kurtz, Crystal, et al., in her arguments she stated, “We’re magnificence motion legal professionals, and we’re antitrust and commodities legal professionals.” She contended that although they weren’t the primary to record a grievance, their paintings used to be essentially the most authentic, with in-depth regression research that known 115 explicit dates when marketplace manipulation befell and 256 precise transactions. Their company’s proprietary set of rules would display “a lockstep pricing dating between spot Bitcoin and Bitcoin futures,” she argued.

With doubt within the crypto community in doubt for a long time as to the allegations that Tether is in fact supported by the US dollar at a 1:1 ratio as claimed; and the Griffin paper finding Insufficient Tether reserves, it will be beneficial to all parties involved in the case brought against Tether and its partner to have the most capable firm lead the case before the court.

Image via Shutterstock

Poloniex and Bittrex Added to Ongoing Class-Action Lawsuit Facing Tether and Bitfinex Over Bitcoin Price Manipulation

US cryptocurrency exchanges Bittrex and Poloniex have been added to a class-action lawsuit that alleges billions of unbacked Tether stablecoin were used to manipulate Bitcoin price.

The two US exchanges have been added as defendants in an ongoing lawsuit against Tether and Bitfinex. Poloniex and Bittrex have been summoned to appear to the court because of their alleged involvement in the manipulation of Bitcoin price during the bull run in 2017.

No place to hide

Although in the initial lawsuit only Tether and its sister cryptocurrency exchange Bitfinex were named, the plaintiffs now added two more crypto exchanges in the updated lawsuit submitted on June 3.

On June 3, the court document was amended to add crypto exchanges Poloniex and Bittrex to the list of defendants. The amended court lawsuit alleges that Bittrex and Poloniex aided in the purchase of Bitcoin using billions of unbacked Tethers.

The plaintiffs, who dragged Tether and Bitfinex to court in October 2019 for artificially inflating Bitcoin price, are the ones who made the current filing on June 3.

The lawsuit claims that Tether issued billions of its USDT stablecoins without backing them with the US dollar and bought Bitcoin from the spot market, therefore pushing the demand of the leading cryptocurrency.

The lawsuit reports that Tether and Bitfinex manipulated the prices of Bitcoin all the way to its an all-time high of $20,000 in December 2017. The plaintiffs claim that Tether issued billions of its USDt stablecoins to itself out of thin air that it then moved to crypto exchange Bitfinex, which purposely used those USDT to buy and inflate Bitcoin price between 2016 and 2017. Tether and Bitfinex are sister companies. The two companies share executive management.

The plaintiffs claim that Bitcoin’s bull and its consequent crash would never have occurred if it were not for manipulation using Tether.

The plaintiffs, named as Pinchas Goldshtein, Aaron Leibowitz, Jason Leibowitz, Benjamin Leibowitz, and Matthew Script, are all US citizens who bought various cryptocurrencies during the time in question. These investors claimed to have suffered economic losses because of Bitfinex and Tether market manipulation. They are seeking reparations for losses they incurred when the Bitcoin bull finally crashed.

After the Bitcoin price reached a peak value of $20,000, it began nosediving. Bitcoin then continued losing 84% of its value by 2018 December, declining to a low of $3,191. Consequently, the rest of the crypto market followed, with several cryptocurrencies losing more than 95% of their value, and since then several have never recovered.

Has judgement final come for 2017 ICOs? Class-action lawsuits name hosts of crypto defendants

Bitfinex and Tether have been at the center of USDT controversy associated with market manipulation. In November 2019, another lawsuit dragged the two companies to court for Bitcoin price manipulation. But the two firms defended themselves and dismissed the class-lawsuit as “ridiculous” allegations.

Meanwhile, several major cryptocurrency exchanges are also facing class-action lawsuits for multiple reasons. In April this year, BitMEX, Binance, Block.One, and others were named in 11 class-action lawsuits filed in the United States alleging them for misleading investors into purchasing unregistered assets and violating federal securities laws. It remains to see how the rule of law will take its course.