- Two among the largest crypto exchanges, Bittrex and Poloniex, recently got involved in a class-action lawsuit.
- The lawsuit originally targeted Bitfinex and Tether, accusing them of crypto price manipulation in 2017.
- The amended lawsuit claims that Poloniex and Bittrex assisted with the scheme.
Two major cryptocurrency exchanges — Poloniex and Bittrex — were targeted by a class-action lawsuit that accused them of manipulating crypto markets.
Crypto price manipulation in 2017 still unresolved
According to the plaintiffs, Bittrex and Tether were the ones responsible for a major bull run that took place in 2017. The lawsuit, which was originally filed in October 2019, alleges that the Tether and Bitfinex inflated the USDT supply without having an adequate amount of USD to back up the stablecoins.
This drove crypto prices in 2017, causing hundreds of coins to hit their all-time highs, including Bitcoin, which reached $20,000 per unit.
The lawsuit came from the investors who bought digital currencies during this time, but who now believe that the prices were inflated artificially.
According to the filing “Tether issued billions of USDT to itself with no U.S. dollar backing— simply creating the USDT out of thin air.” These funds were then used for purchasing crypto assets, which led to a spike in prices.
How did Bittrex and Poloniex get involved?
The amended filing also directly mentions Bittrex and Poloniex, claiming that the exchanges were involved in the scheme. It says that the two companies facilitated the coordination of massive buy orders on multiple other exchanges, which caused the illusion of new liquidity in the markets.
In other words, Bitfinex and Tether started the scheme, but Bittrex and Poloniex assisted, which makes them guilty as well. Lastly, the lawsuit noted that the two worked with Tether “and adopted its guarantee that each USDT is backed by one U.S. dollar.”
As a result, they quickly became listed among the largest exchanges in the digital currency industry.
Interestingly enough, one of the plaintiffs, Miami, Florida-based Pinchas Goldshtein, seems to still be involved with trading. The suit specified that Goldshtein saw major losses after purchasing 629 Bitcoin futures contracts between January 2018 and June 2020. This suggests that Goldshtein also traded back when the filing was submitted.