Tether and Bitfinex Face Class Action Lawsuit Over Alleged Crypto Market Manipulation

A significant development has taken place in a long-standing class action lawsuit against Tether and Bitfinex, with a US federal judge certifying the case. This move allows thousands of retail investors to pursue claims that the two companies artificially inflated Bitcoin and Ethereum prices nearly a decade ago.

The plaintiffs allege that unbacked USDT was used to manipulate market prices during the 2017 bull run, which saw Bitcoin climb from under $1,000 to nearly $20,000 before crashing. This theory is supported by academic research, which suggests that Bitcoin prices rose systematically following Tether minting events during periods of market weakness.

The defense has consistently dismissed the lawsuit as a 'clumsy attempt at a money grab,' but the companies arrive at this stage with some regulatory baggage. In 2021, Tether and Bitfinex paid $61 million to settle claims brought by the New York Attorney General and the Commodity Futures Trading Commission.

The case now moves into the discovery phase, where both sides will be compelled to produce evidence. This phase will determine whether the theoretical case built on academic research and prior regulatory findings can hold up against the full weight of evidence.