Tether Lawsuit: SDNY Class Action, Celsius, and CFTC Cases

Tether, the issuer of the USDT stablecoin, has been the subject of a decade of legal action centered on two questions: whether USDT was really backed one-for-one by dollars, and whether Tether and its affiliate Bitfinex used unbacked tokens to manipulate cryptocurrency prices. The active Tether lawsuit to watch is a certified class action in the Southern District of New York alleging market manipulation. Alongside it, Tether has already paid $42.5 million to the Commodity Futures Trading Commission, $18.5 million to the New York Attorney General, and $299.5 million to settle a bankruptcy clawback brought by the Celsius Network estate. A separate suit by USDT purchasers was dismissed in 2023.

The Market Manipulation Class Action in the Southern District of New York

In re Tether and Bitfinex Crypto Asset Litigation, case no. 1:19-cv-09236, was filed in October 2019 and is before Judge Katherine Polk Failla.¹ The plaintiffs accuse Tether, Bitfinex, parent company DigFinex Inc., payment processor Crypto Capital Corp., and businessman Reginald Fowler of conspiring to inflate Bitcoin and other cryptocurrency prices, producing what they describe as a “colossal bubble.”²

What the Plaintiffs Say Happened

The complaint alleges that Tether issued between $1 billion and $3 billion in USDT that was “completely unbacked” and “printed out of thin air,” even though the company publicly represented that every token was backed one-to-one by U.S. dollars.² According to plaintiffs, Tether moved that unbacked USDT to Bitfinex, which routed it to accounts on Poloniex and Bittrex, where the tokens were used to make timed purchases of cryptocurrency whenever prices sagged. The buying created an artificial floor and the appearance of organic demand.³ When the market broke in 2018, plaintiffs say, buyers were left holding assets they had paid inflated prices for.

The lawsuit brings claims under the Sherman Act, the Commodity Exchange Act, RICO, common-law fraud, and New York General Business Law.²

What Survived Dismissal

In September 2021, Judge Failla let the antitrust and Commodity Exchange Act claims proceed but dismissed the civil RICO claims, finding the connection between the alleged racketeering and plaintiffs’ losses too indirect.³ Several other counts fell out as well, but the core market-manipulation theory survived.²

Class Certification and the Appeal

On March 6, 2026, Judge Failla granted class certification with modifications. Two classes were certified: purchasers of crypto commodities and purchasers of crypto commodity futures. People who acquired cryptocurrency through mining, gifts, or blockchain forks were excluded, and membership was limited to those who purchased using fiat currency or stablecoins. The futures subclass was restricted to purchasers who traded on U.S.-based exchanges or on “stateless” exchanges that either matched trades on American servers or barred buyers from revoking orders once placed.⁴

The court accepted the plaintiffs’ regression model for showing class-wide impact but rejected their event-study analysis as statistically unreliable. Judge Failla reserved the question of whether the defendants’ conduct actually caused the price increases for summary judgment.¹

Tether and Bitfinex petitioned the U.S. Court of Appeals for the Second Circuit to review the certification. As of March 2026, the petition had been filed, with no public sign of whether it had been granted and no briefing schedule set.⁵ No trial date has been set in the district court.⁶

Reginald Fowler’s Separate Criminal Case

Fowler, named as a co-defendant, ran the shadow banking operation Crypto Capital Corp. and faced his own federal prosecution. In April 2022, he pleaded guilty to all five counts. In June 2023, he was sentenced to six years and three months in federal prison, ordered to pay $53 million in restitution, and hit with a $740 million forfeiture order. Two Crypto Capital co-conspirators, Oz Yosef and Ravid Yosef, were indicted but remain at large.⁷

The Celsius Bankruptcy Clawback and $299.5 Million Settlement

After Celsius Network filed for bankruptcy in July 2022, its estate went after Tether. In August 2024, the estate filed an adversary proceeding in the U.S. Bankruptcy Court for the Southern District of New York to recover Bitcoin pledged as collateral on an $812 million loan.⁸

The fight was over roughly 39,500 Bitcoin. Celsius alleged that when it faced a margin call in June 2022, Tether liquidated the collateral without honoring a mandatory 10-hour waiting period under their agreement, selling the coins at an average price of about $20,656.⁹ The estate also alleged Tether did not sell at arm’s length but transferred the Bitcoin to Bitfinex. Given Bitcoin’s later rally, the estate valued the contested transfers at more than $4 billion. The claims combined bankruptcy preference and constructive fraudulent transfer theories with breach of contract under British Virgin Islands law and state avoidance claims under New York, New Jersey, and Delaware law.¹⁰

On June 30, 2025, Chief Judge Martin Glenn denied most of Tether’s motion to dismiss. The court dismissed one claim tied to a BVI implied duty of good faith but let the core breach-of-contract and transfer claims proceed, and rejected Tether’s jurisdictional arguments after finding the relevant communications and transactions occurred within the United States.¹¹⁹

The case settled instead of going to trial. On October 14, 2025, the Blockchain Recovery Investment Consortium (BRIC), a joint venture of GXD Labs and VanEck managing litigation for the Celsius estate, announced that Tether would pay $299.5 million.¹² That was a fraction of the estimated $4 billion the estate had originally sought. Tether CEO Paolo Ardoino said the company was “pleased to have reached a settlement of all issues related to the Celsius bankruptcy.”¹³

The CFTC’s $42.5 Million Enforcement Action

On October 15, 2021, the Commodity Futures Trading Commission entered consent orders against Tether and Bitfinex for violations of the Commodity Exchange Act.¹⁴

The CFTC found that from at least June 2016 through February 2019, Tether misrepresented that every USDT was fully backed by U.S. dollars in reserve. During a 26-month sample window between 2016 and 2018, Tether actually held enough fiat currency to back all circulating USDT on only 158 of 791 days examined, or 27.6% of the time. Its reserves included unsecured receivables, non-fiat assets, and funds parked with third-party payment processors. At one point, roughly $382 million of Tether reserves had been commingled with Bitfinex operational and customer funds. Tether had no automated system for tracking reserves against outstanding tokens until at least 2018 and relied on a manually maintained spreadsheet. Despite publicly claiming routine professional audits would verify its reserves, no such audits were conducted.¹⁵

Tether was ordered to pay a $41 million civil penalty and Bitfinex $1.5 million, for a combined $42.5 million. Both companies were ordered to cease and desist and barred from publicly denying the order’s findings.¹⁴¹⁵

The New York Attorney General Settlement

On February 23, 2021, New York Attorney General Letitia James announced a settlement with iFinex, the parent of Bitfinex and Tether, ending an investigation that began in April 2019.¹⁶ The Attorney General concluded that the companies made false statements about USDT’s backing and concealed roughly $850 million in losses tied to Crypto Capital Corp. Her office also found that starting in mid-2017, Tether lacked banking access and had no reserves backing its dollar peg.¹⁷

The companies paid $18.5 million to New York State and were banned from all trading activity with New York persons and entities. For two years, they had to submit quarterly reports to the Attorney General’s office covering reserve composition, corporate account segregation, intercompany transfers, and use of payment processors, and to publicly disclose the categories of assets backing USDT on a quarterly basis.¹⁸ Tether and Bitfinex settled without admitting or denying the findings and said publicly that “there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices.”¹⁷

A USDT Purchaser Class Action That Was Dismissed

Not every case against Tether has moved forward. A separate class action filed in 2021 by USDT purchasers, distinct from the broader market-manipulation case, alleged that Tether and Bitfinex made false statements about the adequacy of USDT reserves and that buyers would not have purchased the token had they known. The claims included breach of contract, unjust enrichment, and state deceptive trade practices violations. In August 2023, Judge Laura Taylor Swain of the Southern District of New York dismissed the case in full, holding that the plaintiffs failed to establish standing because they did not adequately allege injury.¹⁹

Reported DOJ Money-Laundering Investigation

In October 2024, Fortune reported that federal prosecutors in Manhattan were investigating whether Tether had violated anti-money-laundering and sanctions laws, focused on alleged USDT use by criminal networks involved in drug trafficking, terrorism financing, and hacking. The reporting described the probe as an expansion of an earlier investigation into whether Tether’s backers committed bank fraud. Tether denied the allegations. CEO Paolo Ardoino called the reporting “reckless” and said, “There is no indication that Tether is under investigation.” No charges have been publicly filed, and no government officials confirmed the probe on the record.²⁰

Swan Bitcoin’s Suit Against Gibson Dunn

One related case does not target Tether directly. In November 2024, Swan Bitcoin sued the law firm Gibson, Dunn & Crutcher in Los Angeles Superior Court for breach of fiduciary duty and attorney malpractice. Swan had retained Gibson Dunn in September 2024 to represent it in a trade-secrets case against Tether involving contractors from a joint venture between the two companies. Swan alleged that after the firm made a lateral hire of a litigator who had advised Tether, Gibson Dunn moved to withdraw from Swan’s case in order to take Tether as a client. Swan’s complaint said the firm had “betrayed its client for Tether’s billions” and sought an injunction blocking the withdrawal.²¹

Reserves, Audits, and the GENIUS Act

The reserve question that produced most of Tether’s legal exposure now sits inside a new regulatory framework. As of early 2026, Tether reports that USDT is backed by $184 billion in reserves, mostly U.S. Treasury bills, with smaller allocations in gold, bitcoin, and loans. The company has historically relied on periodic attestations rather than full financial audits. In March 2026, Tether announced it had hired a Big Four accounting firm for its first comprehensive financial statement audit, covering assets, liabilities, internal controls, and reporting systems.²²

The GENIUS Act, signed into law by President Trump on July 18, 2025, created a federal regulatory regime for stablecoins. Issuers must maintain 100% reserve backing with liquid assets such as U.S. dollars or short-term Treasuries, publish monthly reserve reports certified by their CEO and CFO, and run anti-money-laundering and sanctions compliance programs. Issuers must also have the technical ability to freeze, seize, or burn stablecoins when legally ordered to do so.²³ The law takes full effect in January 2027, or 120 days after regulators issue final rules, whichever comes first. Stablecoins not issued by a “permitted payment stablecoin issuer” under the Act will face restrictions on being treated as cash equivalents for accounting purposes or used as margin and collateral.²⁴

Tether has said USDT is “progressing towards GENIUS Act compliance.” In January 2026, the company announced USA₮, a separate dollar-backed stablecoin built for the U.S. market and issued by Anchorage Digital Bank, a federally regulated institution, with Cantor Fitzgerald as reserve custodian.²⁵

1
CourtListener. In Re Tether and Bitfinex Crypto Asset Litigation
2
Justia. In Re Tether and Bitfinex Crypto Asset Litigation Opinion and Order
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FNF Law. Tether Bitfinex Must Face Crypto Market Manipulation Claims
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Justia. In Re Tether and Bitfinex Crypto Asset Litigation – Section: Class Certification
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Law360. Tether Bitfinex Appeal Class Cert in Bitcoin Rigging Suit
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PACER Monitor. In Re Tether and Bitfinex Crypto Asset Litigation
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Amy Castor. Reggie Fowler Sentenced to 6 Years in Prison
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Bloomberg Law. Celsius $4 Billion Bitcoin Transfer Suit Against Tether Survives
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Today’s General Counsel. Celsius Lawsuit Against Tether for Allegedly Improper Bitcoin Liquidation to Proceed
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U.S. Bankruptcy Court SDNY. Celsius Network Limited et al v. Tether Limited et al Opinion
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U.S. Bankruptcy Court SDNY. Celsius Network Limited et al v. Tether Limited et al
12
BusinessWire. Blockchain Recovery Investment Consortium Announces $299.5 Million Settlement with Tether in Celsius Network Bankruptcy
13
The Block. Celsius Wins $300 Million Tether Bankruptcy Case
14
CFTC. CFTC Orders Tether and Bitfinex to Pay Fines
15
CFTC. Tether Holdings Limited Consent Order
16
New York Attorney General. Attorney General James Ends Virtual Currency Trading Platform Bitfinex’s Illegal Activities in New York
17
CNBC. Tether, Bitfinex Reach Settlement with New York Attorney General
18
New York Attorney General. Settlement Agreement – iFinex Inc. and Tether
19
Debevoise & Plimpton. Debevoise Secures Complete Win
20
Fortune. Tether Department of Justice Probe
21
The American Lawyer. Gibson Dunn Sued by Crypto Client After Lateral Hire Causes Conflict of Interest
22
CoinDesk. Tether Hires a Big Four Firm for a Full Audit of USDT Reserves
23
The White House. Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law
24
Federal Reserve Bank of Chicago. Stablecoins Under the GENIUS Act
25
Tether. Tether Announces the Launch of USA₮