The plaintiffs behind a class-action lawsuit are alleging that Bittrex and Tether drove the 2017 bull run through market manipulation and have requested the issuance of summons to exchanges Bittrex and Poloniex. The lawsuit filed in October last year, alleges that crypto exchange giant 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 lawsuit is on behalf of investors who purchased cryptocurrencies at what they believe are artificially inflated prices.
The class-action lawsuit claims that a plaintiff suffered economic losses as a result of purchasing 629 Bitcoin futures contracts between January 16, 2018, and June 3, 2020, which shows that plaintiff was making trades the same day the filing was submitted.
Plaintiffs allege Tether of creating USDT out of thin air.
The plaintiffs have alleged that Tether issued billions of USDT to itself with no US dollar backing and simply creating the USDT out of thin air. The USDT stablecoin was used to buy cryptocurrencies resulting in a spike of the price of digital currencies. The lawsuit states that the price bubble resulted in billions of dollars of damage to innocent crypto commodity purchasers. The amended filing claims that crypto exchanges Bittrex and Poloniex were also in on the scheme, and facilitated the coordination of massive buy orders across multiple crypto exchanges to create the illusion of fresh liquidity flooding into the markets.
Research shows Tether’s printing does not impact bitcoin’s price.
According to a new study from the Centre for Economic Policy Research, stablecoins are not driving up the price of Bitcoin or any other cryptocurrencies. Researchers Richard K Lyons from UC Berkeley and Ganesh Viswanath-Natraj from the Warwick Business School looked at the minting of USDT Tether and other stablecoins over the last three years and concluded that the price of bitcoin is not affected by the issuance of these stablecoins. The researchers found little correlation between crypto prices and new stablecoins minting and issuance of USDT.