Popular crypto trading platforms Bittrex and Poloniex are facing a class action lawsuit which accuses them, along with Tether and Bitfinex, of manipulating the market shortly before the 2017 rally.
The lawsuit, which was filed back in October 2019 by a group of investors who bought the assets at an artificially inflated price, alleges Bitfinex and its sister company Tether artificially increased the supply of the USDT during the 2017 rally, when Bitcoin reached its all-time high of $20,000. According to the plaintiffs, both platforms issued USDTs which were not backed by US dollars.
These USDTs reportedly created out of thin air were used to buy cryptocurrencies, which resulted in prices "spiking far above their legitimate value in the largest bubble in human history, and ultimately resulting in billions of dollars of damage to innocent crypto commodity purchasers."
The plaintiffs claim the trading platforms Bittrex and Poloniex also participated in this fraudulent scheme by allowing the coordination of huge purchase orders through multiple exchanges in order to create the illusion of a lot of liquidity in the market. According to the lawsuit:
"With the willing assistance of Bittrex, Inc. (“Bittrex”) and Poloniex LLC (“Poloniex”), two other crypto-exchanges, Bitfinex and Tether used fraudulently issued USDT to make strategically timed, massive purchases of cryptocommodities just when the price of those commodities was falling."
At least one of the plaintiffs stills trades in the crypto market in spite of the alleged damage. According to the lawsuit, Goldstein suffered losses as a result of the purchase of 629 Bitcoin futures contracts between January 16, 2018 and June 3, 2020, that is to say, up to the time the lawsuit was filed.
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