On November 22, 2019, New Yorker Eric Young and Pennsylvanian Adam Kurtz, filed a class-action lawsuit against iFinex Inc., the owner of Tether and Bitfinex. As per the documents submitted by the plaintiffs to the Western District of Washington, the Hong Kong-based firm had propped and popped the largest crypto fraud in history.
According to the claims, iFinex released unbacked Tether (USDT) in circulation that was then sold for Bitcoin (BTC) to prop its price in 2017. The plaintiffs argued that around that time, the firm made traders believe that a US dollar backs each USDT.
The 1:1 “guarantee” had prompted eager participation from crypto enthusiasts. The influx of activities resulted in most traders having an excessive amount of USDT. Then, as alleged, after inflating the price of Bitcoin, iFinex and co-conspirators have converted BTC back into USDT to replenish the stablecoin’s reserves. The manipulation, as emphasized by the plaintiffs, had led to the disappearance of $265 billion from the crypto market in 2018.
Since the filing, Tether and Bitfinex had denied the accusations. Both firms have been working closely with their legal representatives to terminate the lawsuit. However, in the latest development, it seemed that the plaintiffs had a change of plans.
As reported on January 8, Young and Kurtz went to Washington State’s Western District a day before. The two voluntarily terminated the lawsuit they filed in November. However, before iFinex and daughter companies could even process the information that the case against them had been dismissed, they were met with the news of a newly-filed class-action lawsuit.
Notably, the lawsuit was refiled the same day the news about the termination of the original filing broke out. However, this time, Young and Kurtz got themselves another ally, David Crystal. Furthermore, the plaintiffs had submitted the documents to the Southern District of New York.
Bitcoin trader files a similar class-action lawsuit
On January 9, a day after the original lawsuit has been refiled in New York, another plaintiff came forward. Bryan Faubus, a self-proclaimed BTC trader, submitted to the same district files and documents that are almost identical to the class action filed by the first group of plaintiffs.
At the time of writing, it was still unclear why the plaintiffs decided to refile the lawsuit in a different jurisdiction. Even the second case filing had left spectators confused as well. Until now, no one can tell if Young and his associates are related to Faubus or not.
However, industry analysts were quick to suggest possible reasons. Two of the most plausible explanations are iFinex’s NY incorporation and the state’s notable reputation in terms of dealing with financial litigations.
Bitfinex’s general counsel, Stuart Hoegner, released the firm’s official statement Friday. He emphasized that whether the lawsuit is filed in Washington or New York, the case would still be dismissed since they are mercenary and meritless.