Bitfinex Wants Dismissal of ‘Unfounded’ $1.4 Trillion Bitcoin Market Manipulation Lawsuit


Bitfinex and sister firm Tether moved to dismiss a Bitcoin manipulation lawsuit filed against them in October last year. The crypto companies said that the allegations are baseless.

Bitfinex And Tether Call For Dismissal Of ‘Preposterous’ Lawsuit

In October 2019, a group of bitcoin and cryptocurrency traders David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz, and Pinchas Goldshtein filed a class-action lawsuit against Bitfinex and Tether claiming that the crypto exchange and the USDT printing firm manipulated markets resulting in damages to the tune of $1.4 trillion. On Thursday, Tether and Bitfinex parent firm iFinex filed a motion for dismissal of the lawsuit.

Earlier in June this year, Bitfinex General Counsel Stuart Hoegner, had labeled the lawsuit as an “unproven conspiracy theory” in a company announcement. But the two cryptocurrency companies decided to strengthen their stance in a supporting memorandum. Extracts from the statement read:

Plaintiffs attempt to patch this gaping hole in the CAC with unsupported conclusions and rank speculation, rather than allegations of fact.

The Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims fail because Plaintiffs do not plead facts demonstrating a RICO conspiracy, or that they suffered an injury proximately caused by such a conspiracy. All of the claims should be dismissed.

Accounts Used For Crypto Market Manipulation Not Owned by Bitfinex

The plaintiffs claimed that from 2015 to 2018, a Bitfinex ‘account’ owner wired around $3 billion USDT to ‘accounts’. These accounts exist on Bittrex and Poloniex (also the defendants in the case). As per the allegation, USDT transfers stopped temporarily during a ten-day period in January 2018.

Bitfinex slammed these accusations in the memorandum. It stated that the plaintiff’s case entirely depends on the ‘assumption’ that these ‘accounts’ belong to the exchange. In its defense, Bitfinex added:

Plaintiffs do not allege any fact—i.e., no document, no witness, no email, no other communication—suggesting that the Accounts are owned or controlled by Bitfinex. Instead, Plaintiffs ask the Court to infer that the accounts are owned or controlled by Bitfinex based on innocuous facts that do not demonstrate such ownership or control.

The iFinex owned cryptocurrency exchange went on to say that it has ‘thousands of customers all over the world’. Therefore, transfers from Bitfinex to the mentioned ‘accounts’ don’t imply anything about the ownership of these accounts.

Even if the transfers are as large as $3 billion, it doesn’t mean that a single person or entity owns the accounts.

Lawsuit Fails To Prove That The Plaintiffs ‘Actually’ Suffered Damages

Bitfinex and Tether have negated the possibility of the complainants incurring serious losses. The crypto companies said that it is ‘rare’ that the plaintiff ‘traded directly with a defendant’. According to the statement:

she will have to plead enough facts to make plausible the inference that the prices of her trades with a third party have been substantially influenced by a defendant’s trades with a third (or fourth or fifth . . . )

The accuser as per Bitfinex and Tether has not brought to light even a single transaction that can prove that its financial impact on the complainant was harmful.

The allegations don’t add up on any grounds, and hence, should be outrightly dismissed, Bitfinex said.

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