Posted 2 years ago | by Ben Armstrong

Bitfinex Battling Legal Cases on Two Fronts

In April it was revealed that the New York State Attorney's office was suing Bitfinex, the company behind the cryptocurrency stablecoin Tether (USDT). The lawsuit is on its way to be heard by the New York State Supreme Court. However, Bitfinex is now facing a second round of legal action in the form of a class action lawsuit.

The basis for both of the lawsuits centers around the fact that Bitfinex, a cryptocurrency exchange, manipulated the entire cryptocurrency market by providing itself with an unlimited & fraudulent line of credit. They did this by claiming to have a 1:1 supply of its stablecoin USDT & US Dollar reserves. Audits have revealed that Bitfinex is currently holding 1:1 reserves based on their collective assets; not necessarily in USD. Although many investors believe that during the bull run of 2017 when Bitcoin soared, Bitfinex did not have the required reserves to make Tether a stablecoin.

Now many of those investors have joined the class action lawsuit to holds Bitfinex accountable for its alleged manipulation. Kyle Roche, the founding attorney of the Roche Freedman law group, is leading the charge for disgruntled investors. On October 7th, he tweeted out his intentions:

In the court filing, Roche Freedman accuses Bitfinex of running a very sophisticated scheme meant to defraud investors. The filing goes on to describe Bitfinex's actions as "part-pump-and-dump, part-money laundering". It will be interesting to watch as this lawsuit unfolds because it is now running parallel to the New York State Attorney lawsuit against Bitfinex. If Bitfinex were to lose the NY lawsuit in the Supreme Court then it could establish a court precedent that will make it difficult to imagine Bitfinex winning the class action lawsuit.