Tether, the dollar-pegged stablecoin, moved Friday to dismiss a “frivolous” class-action lawsuit accusing it of manufacturing the “largest bubble in human history.”
The class-action lawsuit, filed last month, alleges damages of $1.4 trillion, and accuses Tether of printing billions of dollars’ worth of the digital currency unbacked by real dollars. Further, it claims Tether fraudulently manipulated the price of Bitcoin, inflating the cryptocurrency’s price to $20,000 in 2017.
Today Tether filed a motion to dismiss with the U.S. District Court in the Southern District of New York, asserting that the suit is riddled with errors and lacks “the required legal basis to proceed past the very early stage of the case.”
In a statement today, the firm said the plaintiffs’ suit was based on a “flawed” and “unpublished” academic paper from 2018, penned by University of Texas scholars John Griffin and Amin Shams. Though the paper was subsequently amended, and published earlier this month, Tether claims the final paper “walk[ed] back support for a core allegation of the Plaintiffs’ complaint.”
Tether has a similar critique for the class-action suit, saying it "claims, without evidence and in defiance of reason, that somehow Tether manipulated a market more than seven hundred times the size of total Tether USDT issuances in circulation between March and December of 2017, something that any sophisticated and rational observer of the digital token ecosystem knows to be ridiculous."
This is “something that any sophisticated and rational observer of the digital token ecosystem knows to be ridiculous,” the company added.
Tether is under criminal investigation by the New York Attorney General, which has accused the company, along with its sister exchange iFinex, of covering up an $850 million financial hole after customers and corporate funds were seized by various law enforcement agencies. That suit led to the revelation that Tether, from October 2018, was only “74 percent backed.” Internal emails show Bitfinex staffers fretting during that period about the exchange’s operational problems plummeting the price of Bitcoin.
Tether added that the class-action suit “undermines the many contributions of thousands of members of the digital token economy,” and that it looked forward to defending itself on behalf of its “customers and stakeholders, and the cryptocurrency community.”