Tether and Bitfinex have a bit of a complicated reputation within the cryptocurrency industry. In 2017, Tether was under speculation of being a price manipulation tool for bitcoin which is a claim that they have repeatedly denied and were also accused of not fully backing up their token supply with US dollars as previously claimed. In 2019, these rumors were partially confirmed after an investigation from the New York Attorney General’s office revealed that Tether had given Bitfinex access to its reserves to cover up hundreds of millions of dollars in losses and also on the backed up 73 percent of their tokens and not 100 percent that they claimed.
It seems the controversy surrounding both companies is not going to end anytime soon as on October 5, 2019, both firms published blog posts which state that they anticipate that they will be receiving a lawsuit based on an unpublished paper that claims that Tether manipulates the cryptocurrency market.
According to the respective blog posts, the firms state that the soon-to-be published paper is based on flawed methodology, cherry picked data and also state that the paper is not a peer-reviewed one and as such, should not be taken seriously. However, they do acknowledge that they expect unethical lawyers to run with the lawsuit based on this flawed paper and they also expect to be charged soon. However, they have stated that they will defend themselves if and when the lawsuit does happen.
“These baseless accusations are an attempt to undermine the growth and success of the entire digital token community, of which Bitfinex and Tether are key parts. It is an attack on the work and dedication of not just Bitfinex’s stakeholders, but thousands of our colleagues, too,” Bitfinex says.
Into those posts, they also stated that they have never had any time been involved in market manipulation or price-fixing.
“All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets. It is irresponsible to suggest that Tether enables illicit activity due to its efficiency, liquidity and wide-scale applicability within the cryptocurrency ecosystem,” the post says.