Crypto Market Unimpressed by Tether Lawsuit
The crypto market once again showed that it can ignore negative news about Tether (USDT), the most popular stablecoin, and that it seemingly agrees this coin is still worth one U.S. dollar.
While the recent lawsuit against Bitfinex and Tether was expected by the two companies, the market seems completely oblivious to it altogether, as USDT still trades over one U.S. dollar.
As reported, a major class-action lawsuit has been filed on October 6th against cryptocurrency exchange Bitfinex and its sister company, stablecoin issuer Tether, claiming that the two companies used USDT to manipulate the crypto market during 2017-2018 bull market and they caused "the biggest financial bubble in human history."
Since the news broke yesterday, the most popular stablecoin in the world and the 5th coin by total market capitalization has been trading above 1 USD.
And just because the market didn’t notice or doesn’t care for the news, doesn’t mean that various commentators follow suit. On the contrary – they has delivered various comments on the lawsuit, showing the difference of opinions and general divisiveness on this issue.
One of the people to notice this is Emin Gün Sirer, CEO of Ava Labs, which created the decentralized services platform Ava, who said that the “Cryptotwitter is fiercely divided on Tether,” with some believing USDT is “the key ingredient of repeated pump-and-dumps,” and others that it’s “an accurate and semi-transparent reflection of natural market forces.” In the same Twitter thread, he said that this is “a monumental lawsuit against Tether-based manipulation of cryptocurrency prices,” led by an “absolutely top notch” law firm. As a reminder, the five plaintiffs are represented by law firm Roche Freedman, which worked on the (in)famous Craig Wright case.
Whatever the case might be and however the court might find the outcome, this suit will bring an unprecedented level of transparency to Tether. That's something that almost everyone will agree is a good thing for the whole space.— Emin Gün Sirer (@el33th4xor) October 7, 2019
On the other hand, Gabor Gurbacs, Director of Digital Asset Strategy at an investment management firm VanEck, tweeted that he’s “tired of hoodwink academics, hype-media and uninformed lawyers discrediting the hard work & structural innovation that Tether and Bitfinex built,” adding that the two built services for bitcoin and crypto companies not provided by others. “Stop the witch-hunt; protect innovation,” he said.
I don’t know and it isn’t my business, so I can’t answer your question. Tether customers probably read their contracts when they signed it and used the asset. Again I don’t know but good question.— Gabor Gurbacs (@gaborgurbacs) October 7, 2019
Enh. Not every business is under investigation for fraud after allegedly covering up an $850 million loss caused by close ties to a "payment processor" whose principals have been indicted for federal crimes. Like it or not, Tether & Bitfinex have serious issues to account for.— Jake Chervinsky (@jchervinsky) October 7, 2019
Meanwhile, in his daily commentary, Mati Greenspan, Senior Market Analyst at eToro, stressed that in major financial institutions across the globe, the process of creating unbacked currency for the purpose of purchasing financial assets and propping-up market prices is simply known as common practice.
"So if anyone is worried that the price of bitcoin has been 'pumped' please take a moment to think about the effects of a full decade of ample quantitative easing and other liquidity injections multiplied by the fractional reserve system and how this might've affected the value of stocks and bonds," the analyst said.
Others believe that the suit should be dismissed altogether.
Hmm. I think I've found the problem.— James Lackland (@james_lackland) October 7, 2019
This is not tether. This is copy-coin speculation
Your clients were speculating with no value thesis and the market took their money.
As it does to the ignorant and greedy.
This suit should be summarily dismissed. pic.twitter.com/MFdVAi6Iht
And then there are those who don’t necessarily believe in absolutes, and that if the one side is right, doesn’t mean the other was wrong.
doesn’t have to be one side or the other thing...it’s possible to believe both (1) what they built was innovative and needed at the time AND (2) some super sketchy questionable things are now coming to light about their processes— Jamie Hinz (@jayhinz) October 7, 2019
All that said, the crypto market seems not to have paid any particular attention the lawsuit, and we are yet to see how, if at all, it will affect both the USDT, and the two companies themselves. But this is not the first time that crypto market ignored somewhat negative news concerning Tether. Just this May, we reported that the lawyers have confirmed the token is not backed 100% by cash reserves, arguing that it’s not obliged to back its token 1:1 with fiat. What did the market thought of that? USDT went on trading above USD.