Roche Freedman revealed its belief that Tether’s issuers may have used the stablecoin to manipulate bitcoin prices and could be creating a “sideshow” in a class action lawsuit. On May 27, lawyers at Roche Freedman published a blog post arguing that Tether had been used to purchase bitcoin at key moments over the last three years, artificially inflating its price.
Bitcoin’s volatility undermines its value as a currency, said the document, so “when large amounts of Tether are created and sent to Bitfinex over a short period of time, it is irrational to conclude that this does not affect the price of bitcoin.” The firm revealed its belief that Tether’s issuers may have used the stablecoin to manipulate bitcoin prices, and it filed a class action lawsuit against them in December. It is also seeking more information about tether from the U.S. Commodity Futures Trading Commission (CFTC).
Roche Freedman partner Ryan Coffey told Bloomberg: “There are some things we don’t know, and until we get answers on those questions it will be difficult for us to move forward with this case.”
Roche Freedman Comments On Tether
The firm presents evidence showing that the amount of Tether in circulation rose sharply just before bitcoin’s price peaked in late December 2018 and early January 2019.
This is not the first time that legal action relating to Tether has been brought against Bitfinex (the exchange behind Tether). In April 2019, Bitfinex was sued by Noble Bank International for US$250 million due to alleged “breaches of fiduciary duty.”
In February 2019, Bitfinex announced it would be closing all accounts trading on its platform with fewer than 10 bitcoins ($7000) deposited or withdrawn within 30 days. It also said that accounts with balances under 100 bitcoins would be blocked from making withdrawals until they had sufficient balance limits reinstated by customer service representatives.
These changes were made after several weeks where Bitfinex experienced technical issues preventing customers from accessing their funds or making withdrawals – both fiat currency and cryptocurrencies such as Bitcoin or Litecoin – which resulted in high levels of customer frustration across social media channels such as Reddit and Twitter.