Tether scores win in class action case as court dismisses RICO claims

In a class-action lawsuit against Tether, a stablecoin issuer, and Bitfinex, the Southern District of New York judge granted motions to dismiss many of these claims.

According to court documents filed in the Southern District of New York on Tuesday, District Judge Katherine Polk Failla granted motions by Bitfinex’s parent company iFinex for the dismissal of key claims made by the plaintiffs that Tether and Bitfinex manipulated the cryptocurrency market. Judge Failla denied six other claims, and dismissed five of the complete claims.

The judge stated that investors would not be allowed to file claims against Bitfinex and Tether under the Racketeer Influenced and Corrupt Organizations Act (or RICO), nor any allegations related to racketeering, or using the proceeds from racketeering to invest. Tether and Bifinex investors cannot “inadequately claim” that the companies have monopoly over the stablecoin marketplace.

Tether wrote Wednesday on his blog, “This case is doomed.” “Even for the remaining claims the Court’s Order raises substantial issues which will ultimately prove fatal to the plaintiffs case.”

The firm also added:

“Litigation will expose the case for what it really is: A clumsy attempt to grab money, which recklessly harms all cryptocurrency ecosystems.”

Related: Bitfinex Market Manipulation Lawsuit Refiled In New York and Joined By Second Case

In October 2019, iFinex filed a complaint alleging that it had manipulated the cryptocurrency market by issuing USDT (unbacked Tether) “in an attempt to signal to market that there was immense, organic demand for cryptocommodities.” Plaintiffs also claim that the firm wanted “to inflate the price cryptocommodities like Bitcoin (BTC) and thus creating and sustaining a bubble in the cryptocommodity marketplace.”

Bitfinex and Tether reached a settlement with the Office of the New York attorney general in February regarding mismanagement of USDT reserve fund funds. However, the civil case against aggrieved investors in crypto continues. Bitfinex and Tether both agreed to $18.5 million in damages to New York, and to report their reserves periodically. They also stopped service to customers in New York.