A federal judge in the United States has granted class certification to investors suing Tether and Bitfinex, marking a significant development in one of the cryptocurrency industry's longest-running legal battles. On February 23, Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York approved the request, allowing the case to proceed as a class action.
The lawsuit, first filed in 2019, alleges that Tether and Bitfinex manipulated the prices of Bitcoin (BTC) and Ethereum (ETH) between 2017 and 2019. The core claim is that Tether issued large amounts of its USDT stablecoin without full backing in reserves. These unbacked tokens were allegedly used to purchase BTC and ETH, creating artificial demand and inflating prices during the 2017 bull run. Plaintiffs argue this activity distorted the market and caused billions of dollars in losses for investors when prices later corrected.
Judge Failla approved the class certification under Federal Rule of Civil Procedure 23, but in a modified form. To manage the case more effectively, the court divided investors into two groups: one for spot market investors who bought BTC or ETH directly, and a second for traders who dealt in cryptocurrency futures markets.
The ruling does not determine whether Tether or Bitfinex broke the law; it merely allows the case to move forward collectively. This structure could bring thousands of investors into the lawsuit, significantly increasing the potential financial exposure for the defendants. The court also reviewed expert testimony, partly accepting and partly rejecting attempts to exclude the testimony of economist Dr. David W. DeRamus.
The case has survived several legal challenges over the years. While some claims, including certain racketeering accusations, were dismissed earlier, claims of common law fraud, commodities fraud, and antitrust offenses remain. Tether and Bitfinex have consistently denied all allegations, arguing the claims lack evidence and misrepresent their operations.
The legal process is ongoing. The court is currently handling a redaction process for the sealed opinion, with both sides required to submit proposals by March 9. The case is expected to move into further legal proceedings, with appeals possible before any trial.
The outcome of this lawsuit is being closely watched by the industry, as it could set key legal precedents for how courts handle market manipulation claims in the digital asset sector and scrutinize stablecoin issuance practices.
