Many of the claims in the class-action lawsuit filed in the Southern District of New York against stablecoin issuer Tether and cryptocurrency exchange Bitfinex have been dismissed by the judge.
District Judge Katherine Polk Failla granted petitions from Tether and Bitfinex’s parent company iFinex to reject crucial claims in the plaintiffs’ case alleging the two corporations manipulated the crypto market, according to court records filed Tuesday in the Southern District of New York.
Judge Failla allowed requests to dismiss five full claims and a portion of one while dismissing motions to dismiss six others.
The judge specifically stated that investors would be barred from bringing claims against Tether and Bitfinex under the Racketeer Influenced and Corrupt Organizations Act, or RICO, as well as charges of racketeering or the use of racketeering funds for investments.
Investors in Tether and Bifinex could not “inadequately assert” the companies’ exclusive power in the stablecoin market, she added.
“This case is doomed,” Tether wrote on his blog on Wednesday. “Even for the remaining claims, the Court’s order raises significant difficulties that, in the end, will be fatal to the plaintiffs’ case.”
The business went on to say:
“Litigation will expose this case for what it is: a clumsy attempt at a money grab, which recklessly harms the whole cryptocurrency ecosystem.”
The company allegedly manipulated the crypto market by releasing unbacked Tether (USDT) “in an effort to convey to the market that there was massive, organic demand for cryptocommodities,” according to the initial complaint filed in October 2019.
The plaintiffs claim that the corporation intended to artificially inflate the price of cryptocurrencies such as Bitcoin (BTC) in order to “create and sustain a ‘bubble’ in the cryptocommodity market.”
While Bitfinex and Tether reached a settlement with the New York Attorney General’s Office in February over the mishandling of USDT reserve assets, the civil lawsuit with a group of dissatisfied crypto investors is still ongoing.
In the first lawsuit, Bitfinex and Tether agreed to pay $18.5 million in damages to New York and to declare their reserves on a regular basis, as well as to stop serving customers in the state.