CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
Yesterday, a class-action lawsuit was formally filed against Bitfinex (BFX) / Tether and associated entities - The suit, which calls for damages of USD 1.4 trillion, is clearly frivolous. That said, BFX / Tether is again in a tricky position to defend themselves.
The named individuals filling the class action lawsuit appear to be nothing more than random holders of cryptocurrency (with some appearing to be relatives). The complaint runs through any issue or negative speculation around Bitfinex. The plaintiffs allege that through printing Tether without having deposited the requisite US Dollars, principals were able to buy bitcoin for essentially nothing and were responsible for the 2017/2018 bubble. The research cited in the suit is almost exclusively a June 2018 article written by John Griffin wherein highlighting correlated market moves, Griffin speculated Tether issuances were a contributor. All major Bitfinex / Tether executives since about 2013 were cited in the lawsuit. The companies had warned that such a case may be imminent over the weekend in a blog post and vowed to 'vigorously defend themselves.'
Crypto Takeaway: The lawsuit is ridiculous on several grounds. Most obviously, the USD 1.4 Trillion in damages number is a complete fabrication. The entire market cap of the cryptocurrency industry never topped that figure and Tether market cap, the entirety of the complaint, only recently touched above USD 4B.
Furthermore, the Griffin article that is essentially the only research cited, proves nothing. The headline figures are that 50% of large Tether transactions were associated with large bitcoin moves, which is literally a statistical coinflip (please call if you'd like more detail on the issues with this paper). Notably, the law firms behind the suit are those same individuals representing Kleinman in the recent Kleinman vs Wright suit. Both claims throw egregious numbers at the defendants in, what many have speculated, is using obfuscation and large numbers in a new and complex market to reach a settlement.
While to us the BFX lawsuit clearly appears ill-intentioned, it once again highlights the conflict of interest between Bitfinex and Tether and the issues it poses more for the organization than anyone else. BFX has tried in the past to give more transparency to Tether issuances, however, they'll apparently have to do more to protect themselves from malicious actors.