State regulators aren’t the only ones going after the cryptosphere right now. Group actions are also on the rise. Indeed, like Coinbase , the iFinex group (Bitfinex and Tether) is targeted by a class action . After almost 2 years of procedure, it has just experienced a favorable rebound.
2019: the year of all worries for Bitfinex
It was the New York attorney general who filed a lawsuit against the iFinex group in April 2019. The complaint accused them of illegally concealing massive financial losses , including the allocation of a loan of 850 million. of dollars in USDT by Tether to Bitfinex. This huge cash flow shortfall is said to have been caused by the use of Crypto Capital’s services by Bitfinex.
In addition, the companies Bitfinex and Tether, after being ordered to produce all the documents relating to their financial exchanges, obtained on appeal the suspension of this injunction from the Supreme Court of the State of New York. Finally in February 2021, the iFinex group finally reached an agreement with the New York attorney general’s office to ratify the case without having to admit the facts. Thus, the companies paid a fine of $ 18.5 million.
In October, it is a group action (class action) which was filed in New York against iFinex for acts of fraud , of market manipulation of digital assets and complicity of laundering money. As such, the Bitfinex exchange is accused of being at the origin of a manipulation of the price of Bitcoin.
The plaintiffs claimed the sum of 1.4 billion dollars from the group iFinex, in only damages . In addition, this class action was based on violations of the law on organizations corrupted and influenced by racketeers (RICO law). Finally, the Tether branch is accused of false claims that the USDT stablecoin was fully backed against the US dollar.
2021: a small victory for Bitfinex and Tether
The New York District Judge, Katherine Polk Failla , by an order of September 28, 2021 partially granted the requests for inadmissibility made by iFinex. Indeed, out of the 12 requests made by the plaintiffs in the class action , the order rejects 6 and partially one . For example, all of the class action claims based on breaches of the RICO Act were rejected. Thus, Bitfinex and the other defendants will not have to respond to the charges of organized crime.
The judge subsequently turned to the plaintiffs’ argument relating to the violation of the Sherman Anti-Trust Act . This law aims to limit anti-competitive acts in the business world. In particular, it prohibits any illicit agreement restricting trade and penalizes any abuse of a dominant position. On this point, the ordinance only partially rejects the request:
Although the Court does not agree with the plaintiffs’ argument that the mere purchase of a product in a market subject to price manipulation is sufficient to demonstrate antitrust prejudice, it ultimately concludes that the plaintiffs have sufficient alleged facts to establish that the price manipulation by which they claim to have been harmed was the product of an anti-competitive practice. “
Katherine Polk Failla
Finally, the iFinex group is enthusiastic about the idea of moving on to the debate phase in this case, which it considers a “clumsy attempt to steal money” .
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Bitfinex and Tether have until October 28, 2021 to respond to the claims of the claimants upheld by the judge. To be continued ! But in any case, the group iFinex does not seem ready to let go.
