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Tether Files Motion To Dismiss Class Action Lawsuit Which Alleges Market Manipulation

Tether Limited has announced its intention to file a motion to dismiss a lawsuit that alleges that Tether and Bitfinex coordinated to cause the Bitcoin bubble of late 2017 via overt market manipulation.

The class-action lawsuit, brought forth by a group of cryptocurrency speculators and investors, states that Tether Limited and Bitfinex are responsible for all of the crypto market losses during the bear market of 2018, since large amounts of unbacked Tether stable coins were printed and injected into the market, causing the price of Bitcoin and other cryptocurrencies to rise well above their equilibrium and ultimately resulting in the crash of early 2018.

However, Tether Limited points out that the class action lawsuit is entirely based on the findings of an unpublished academic paper by John M. Griffin and Amin Shams. Apparently this paper was recently revised to remove one of its key allegations, that trading patterns reveal the issuance of unbacked Tether stable coins. Further, Tether also points out that many other factors caused the crypto bubble which peaked in late 2017, and that it is nonsensical to believe that Tether, which has a relatively small circulating supply, could influence the entire crypto market.

It remains to be seen if this motion to dismiss will succeed, and regardless the New York Attorney General’s Office lawsuit against Bitfinex and Tether Limited continues. is committed to unbiased news and upholding journalistic codes of ethics. For more information please read our Editorial Policy here.

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Coinbase Insider Trading Lawsuit Dismissed

A lawsuit accusing US-based major cryptocurrency exchange Coinbase of insider trading has been dismissed in court.

Arizona resident and plaintiff in the case, Jeffrey Berk, filed a class action lawsuit in March accusing Coinbase of ”tipping off its own employees” of an upcoming Bitcoin Cash (BCH) support on the platform a month before it was launched to customers. He claims that this meant that all those who had been informed ”immediately swamped Coinbase and the GDAX with buy and sell orders, thinning the liquidity but obtaining BCH at fair price” as soon as it went live on 19 December 2017.

Court documents released this week show, however, the judge overseeing the case did not think Berk had sufficient evidence to back up his claims. US District Judge Vince Chhabria from the Northern District Court of California said that he ”fails to describe the scope or content of Coinbase’s duty in anything more than broad generalities. A reader of the Complaint is thus left wondering what Coinbase should have done differently, or why the rollout of Bitcoin Cash would have gone more smoothly had Coinbase done whatever Berk thinks is appropriate.”

Berk and his legal representation have 21 days to appeal the ruling by filing an amended complaint if they wish to further pursue his claim that Coinbase ”unfairly dr[o]ve up the price of BCH for non-insider traders once BCH came online on the Coinbase exchange.”

In another closed crypto case this week, a New York judge dismissed anguished investor Alex Brola’s case against the developers of Nano (XRB), in which Brola claimed the core development team both breached US securities laws and failed to accurately represent the reliability of Italy-based crypto exchange BitGrail. Brola claimed that its negligence contributed to the theft of USD 187 million in XRB in February.


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Crypto Investor Sues AT&T for $224M After Phone Hack Losses

A cryptocurrency investor in the US has filed a lawsuit against his cell phone service provider AT&T on the grounds of gross security negligence that lead to his personal loss of USD 24 million in crypto.

The plaintiff, California resident Michael Terpin, filed a 69-page complaint with the US District Court in Los Angeles on Wednesday alleging that AT&T not only violated its statutory duties and Privacy Policy commitments but went so far as to willingly cooperate with the phone hacker. Terpin claimed that he was victim to digital identity theft two times in seven months when his digital assets were taken via his cell phone number.

Suspicious circumstances were cited by Terpin regarding the actions of at least one AT&T employee. He alleged that ”insider cooperation with the hacker” took place after a store employee offered out his phone number without verifying the person’s identity or requesting any of his private information. Terpin’s complaint details that his number was then used to break into his cryptocurrency accounts and compares the incident to a hotel providing a thief with a fake ID the key to a room and the safe to steal from the rightful owner.

The legal complaint seeks from AT&T USD 200 million in punitive damage and USD 24 million in compensatory damages.

AT&T responded to the accusations, providing CNBC with a statement reading: “We dispute these allegations and look forward to presenting our case in court.”

Terpin may well have been considered a profitable target by potential thieves due to his work in the cryptocurrency industry. In 2013, he co-founded Bitcoin angel investor group BitAngels, as well as the BitAngels/Dapps Fund.

The cryptocurrency community has recently placed a significant focus on increased security as imperative for increasing adoption levels and seeing market prices recover from a relatively poor performance this year, although in this instance it appears to be only AT&T at fault.


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Cryptsy Customers vs Coinbase Case Reopened

A court case stemming from a class action lawsuit brought against Coinbase by Cryptsy customers has been reopened by Judge Marra in the US District Court of the Southern District of Florida. Cryptsy was a popular cryptocurrency exchange that closed down and went bankrupt in early 2016.

Supposedly, Cryptsy was hacked in July 2014 resulting in the loss of BTC 13,000 (Bitcoin) and LTC 300,000 (Litecoin), worth USD 7.5 million and USD 2.1 million respectively at the time of the hack. The CEO of Cryptsy, Paul Vernon, said he did not disclose information about the hack when it happened to avoid panic. He also said he wanted to try and repay losses from the hack with exchange profits.

Due to declining cryptocurrency prices and slowing market activity combined with an article by Coin Fire alleging that Cryptsy was under investigation by US authorities, Cryptsy’s illusion of stability came crashing down and the exchange was forced to close. Vernon never revealed the truth about the 2014 hack until the exchange was already closed.

Cryptsy customers successfully filed a class action lawsuit: Judge Kenneth Marra of the US District Court ordered Paul Vernon to pay USD 8.2 million to customers, in addition to the BTC 11,325 stolen at the time of the hack in 2014.

This was a default judgement since Paul Vernon never showed up in court, having fled the country to avoid arrest. His ex-wife said he moved to China with his girlfriend, but that was a couple of years ago and his whereabouts remain unknown.

Now, Cryptsy customers from the same class action lawsuit are seeking damages against Coinbase, since Vernon converted USD 8.3 million worth of Bitcoin into cash via Coinbase over a period of years. At the time, Vernon claimed this was from profits, but suspicions were raised due to the similar amount of money stolen in the alleged hack.

Coinbase claims that it is not liable for damages since Vernon signed a user agreement saying he would not use stolen funds, part of the broader user agreement that every Coinbase registrant must sign before using the exchange.

According to the motion filed on 4 June 2018 to reopen this case, Coinbase doesn’t oppose compensating victims at this point, especially since the USD 8.3 million of Bitcoins cashed out is now worth about USD 83 million.

To give Coinbase the benefit of the doubt, Cryptsy was a popular and reputable cryptocurrency exchange for years before it closed up, so it is unlikely Coinbase had any idea that Paul Vernon was siphoning off stolen funds. Regardless, based on the wording in the motion, it seems Coinbase is ready to settle up and close this case once and for all, especially since two appellate courts sided against Coinbase prior to the official reopening of the case.


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