Bittrex, Poloniex Added to Lawsuit Claiming Tether Manipulated Bitcoin Market

An amended lawsuit alleging Tether and Bitfinex manipulated the bitcoin market is now claiming Poloniex and Bittrex were also involved.

AccessTimeIconJun 4, 2020 at 3:55 p.m. UTC
Updated Aug 19, 2021 at 2:23 a.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

A lawsuit alleging stablecoin issuer Tether and sister exchange Bitfinex manipulated the bitcoin market is getting bigger.

On Wednesday, cryptocurrency exchanges Bittrex and Poloniex became the latest defendants accused of fraudulently toying with crypto asset prices in an ongoing class action whose plaintiffs have been pursuing Tether and Bitfinex on allegations of fraud, deception and market-manipulation since October 2019.

  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • The 156-page amended suit filed Wednesday continues to allege that Tether and Bitfinex orchestrated a grand scheme to launder and circulate billions of allegedly unbacked USDT stablecoins through the market to the detriment of their customers – the crux of plaintiffs Matthew Script, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz and Pinchas Goldshtein’s case. 

    Plaintiffs further claim that Poloniex and Bittrex were essentially backdoor conduits in that scheme. They claim the pair set up wallet addresses “specifically” to receive huge USDT transfers and “knew” that Bitfinex was the one sending it along.

    Plaintiffs compared the alleged USDT transfer arrangement to that between a casino and a high-level gambler.
    Plaintiffs compared the alleged USDT transfer arrangement to that between a casino and a high-level gambler.

    “Given the size and regularity of these transfers through a mechanism they created for that exact purpose and their perfect visibility into the transactions, Bittrex and Poloniex knew the manipulative effect of the transactions on their exchanges,” the plaintiffs allege.

    The plaintiffs point to USDT inflow patterns as evidence. On Feb. 6 2018, for example, they allege Bitfinex transferred $2 million of allegedly valueless USDT to Poloniex right when bitcoin was hitting a low for the day. A cross-crypto market rally and higher trading volumes ensued.

    “For otherwise peripheral exchanges, these large trades of purportedly fiat-backed USDT created an impression of legitimacy and consumer trust, leading to further trades and fees for the two exchanges,” the suit alleges.

    They also allege that the cabal coordinated USDT transfer patterns in response to the news of the day, including in the wake of the Tether Report

    Stuart Hoegner, Bitfinex and Tether's in-house counsel, called the amended lawsuit “untethered to either the facts or the law” in a statement emailed to CoinDesk. Plaintiffs “conflate perceived correlation with causation in an effort to prop up theories that are untrue and unsupportable,” he said.

    Poloniex did not immediately respond to requests for comment and Bittrex could not be immediately reached.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.