Bitcoin Manipulation Lawsuit Investigation

Bitcoin losses? Find out how our investigation affects you.

Our attorneys are investigating allegations that the cryptocurrency Tether was utilized on the Bitfinex exchange to manipulate the price of Bitcoin.

Bitcoin Losses?

If you lost money in Bitcoin, our financial fraud attorneys are interested in speaking with you. Fill out the form or call us to talk privately with a lawyer about your losses and how they relate to our investigation.


Tether Manipulation Responsible for 50% of Bitcoin Price Rise, Study Finds

In 2017, Bitcoin had a meteoric rise from a low of $750 per coin to a high of $19,783 per coin, only to crash—losing 50% of its value in 16 days. Commentators have since debated what caused this boom and bust. A new study, released in June 2018, may provide some answers.

The study, conducted by John Griffin, a professor at University of Texas, concluded that “at least half of the 2017 rise in bitcoin prices was due to coordinated price manipulation using another cryptocurrency called tether,” CNBC reports, and this price manipulation all occurred on a single cryptocurrency exchange, Bitfinex.

Because cryptocurrency transactions have a public ledger, Griffin was able to analyze millions of data points for suspicious patterns. According to Griffin,

“Fraud and manipulation often leave footprints in the data and it’s nice to have the blockchain [ledger] to track things.”

Study Shows Large Volumes of Tether Coins were Issued as Bitcoin Prices Dropped

Tether is a cryptocurrency purportedly tied to the U.S. dollar. The company that issues the coin, Tether Limited, “claims to have a dollar in the bank for every tether that’s in circulation,” according to Ars Technica. Critics have questioned this claim.

Analyzing the public ledger for cryptocurrency trades on the Bittrex exchange, Griffin found “periods of suspicious bitcoin price activity tied to the issuance of tether,” says CNBC. Griffin found that when Bitcoin prices began to fall, large volumes of Tether coins were issued and used on the Bitfinex exchange to prop up Bitcoin prices. In a single month, Tether Limited—the company that issues Tether—minted 850 million new digital tokens, according to CNBC, and $2 billion in new Tether tokens have been created since April 2017.

Nicholas Weaver, a computer scientist at U.C. Berkeley, explains that “a huge amount of tether has been created” and “has been shifted to the Bitfinex exchange,” where it “buys bitcoin,” thereby “keeping the price up.”

Tether Limited and Bitfinex are run by the same person, J.L. van der Velde, who asserts that “Bitfinex nor Tether is…engaged in any sort of market or price manipulation.” Griffin, who “has a decade-long track record of flagging fraud in financial markets,” according to CNBC, says that the “data speaks” for itself.

Regulators Launch Investigation into Tether

Griffin’s study concluded that “external capital market surveillance and monitoring” may be necessary to prevent price manipulation in the cryptocurrency market.

In other investment marketplaces, government regulators usually perform this oversight function. But, as TechCrunch reports, “The U.S. Securities and Exchange Commissions has issued a warning…that many [cryptocurrency] exchanges are currently unregulated and can do whatever they want with your money.”

The SEC, however, is not the only federal agency that may have supervisory authority. CNBC reports that “the Commodity Futures Trading Commission sent a subpoena to Bitfinex and Tether” in December 2017.

Bloomberg reports that the “Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin,” and the Department Of Justice is collaborating with the Commodity Futures Trading Commission, which has regulatory authority over “derivatives tied to Bitcoin.”

Girard Gibbs' Financial Fraud Experience

Girard Gibbs’ financial fraud and securities lawyers have more than two decades of experience prosecuting fraud. Our attorneys have successfully litigated against some of the largest companies in the United States, and we have recovered more than a billion dollars on our clients’ behalf.

We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California, Top Plaintiff Lawyers in California, The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).

california lawyer attorney of the year CLAY award
titan of plaintiffs bar award
best law firm ranking
chambers USA leading firms award
daily journal top plaintiff lawyers award

Noteworthy Financial Fraud Cases

American Express Financial Advisors Securities Litigation$100 million cash settlement for clients alleging American Express steered them into under-performing “shelf space funds” to reap kickbacks
Chase Bank “Check Loan” Litigation$100 million settlement for consumers alleging Chase offered long-term fixed-rate loans, only to later more-than-double required payments
Peregrine Financial Group Customer LitigationSettlements worth $75 million for futures and commodities investors who lost millions in the collapse of Peregrine Financial Group, Inc.
NantHealthCourt-appointed Co-Lead Counsel in a securities class action alleging the company’s founder violated federal securities law and artificially inflated stock prices

Our Team

Eric Gibbs

Eric has served in leadership positions in a number of high profile, complex financial lawsuits. He has been recognized as a Daily Journal, among the Top 100 Super Lawyers in Northern California, and a Law360 MVP for Consumer Protection.

Dave Stein

David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.