It’s been a bumper weekend for the cryptocurrency industry, particularly in relation to legal and regulatory matters. Major cryptocurrency exchange Bitfinex is back in the news again following the filing of a fresh lawsuit by New York and Miami-based law firm Roche Freedman LLP. The lawsuit has been registered in the Southern District of New York and was put forward by five plaintiffs – David Leibowitz, Benjamin Leibowitz, Jason Leibowitz, Aaron Leibowitz, and Pinchas Goldshtein.
The class-action lawsuit was filed by the five men on behalf of any investors who believe that Bitfinex used USDT tokens created through sister company Tether to manipulate the cryptocurrency market during the late-2017 rally and subsequent crash. It alleges that Bitfinex and Tether employees knowingly used their various operations – including iFinex Inc, BFXNA Inc, Tether Holdings Ltd, DigFinex Inc, and Crypto Capital Corp, amongst others – to intentionally defraud investors and conceal the profits. It notes several US laws that the plaintiffs believe were violated, including New York trade practices, the federal RICO statute, and the Commodities Exchange Act.
News of the lawsuit was met with mixed reactions from the crypto community, with many seeing it as a frivolous money-grab that will go nowhere. On Twitter, many pointed out the multiple altcoin assets the plaintiffs owned which have fallen significantly in value since the time of the claim, and some expressed doubt that the case would succeed. However, despite the dismissals, it is worth noting that the Bitfinex-operated LEO token has fallen significantly since Saturday when it is believed that news of the lawsuit first came to light.
Paypal drops support for Facebook’s Libra project
In other regulatory news, Paypal is the first major investor to pull out of the Facebook Libra project following months of scrutiny and criticism from global superpowers. The Libra project, a Swiss-based non-profit which aims to provide a global digital payment system to Facebook’s billions of users, would understandably pose a threat to Paypal’s business model. Lawmakers in the U.S. believe it could also pose a threat to global economic stability, one of several potential factors that may have prompted yesterday’s meeting between the New York Attorney General, the Department of Justice, and the Federal Trade Commission (FTC) to discuss Facebook’s overbearing market dominance.
The news comes on hot on the heels of reports that the UK Financial Conduct Authority (FCA) has significantly increased investigations into cryptocurrency-related projects in the country. Since last year, there has reportedly been a 74 percent increase in the number of UK crypto projects being scrutinized, according to research from the Financial Times.