A class-action complaint accuses the corporations behind the Tether stablecoin of “propping and popping the largest bubble in history,” which led to a disappearance of $256 billion in crypto wealth.
The complaint accuses the issuer of Tether of manipulating Bitcoin prices. The suing process took place in the US District Court for the Southern District of New York on Sunday.
As owners of the stablecoin own the Bitfinex exchange too, the suit claimed, they can produce effectively unbacked Bitcoin, buy orders that don’t cost them anything with unbacked Tether. It’s supposed that Tether is backed 1:1 by fiat reserves, but recently it was announced by its creators that it can also use other assets to support its value. The complaint said that the purchase orders can artificially push up prices in the illiquid crypto market.
An associate professor at Cornell University Emin Gun Sirer posted on Twitter:
Whatever the case might be and however the court might find the outcome, this suit will bring an unprecedented level of transparency to Tether. That's something that almost everyone will agree is a good thing for the whole space.— Emin Gün Sirer (@el33th4xor) October 7, 2019
Representatives of Tether didn’t immediately comment on the situation. On Saturday they published a statement on the official website titled: “Tether Anticipates Meritless and Mercenary Lawsuit Based on Bogus Study”.