A New York-based legal firm has filed a lawsuit against Tether and Bitfinex, accusing them of cryptocurrency market manipulation.

“Largest bubble in history”

Roche Freedman filed a class-action suit alleging that the stablecoin firm and affiliated crypto exchange have been involved in defrauding investors, manipulating markets and concealing illicit proceeds, the firm’s founding partner Kyle Roche tweeted on Oct. 7.

In the tweet, Roche accused Tether and Bitfinex of creating the “largest bubble in history.”

Filed on Oct. 6, the complaint document states that Bitfinex and Tether primarily accomplished a “sophisticated scheme” involving “part-fraud, part-pump-and-dump, and part-money laundering.”

Suit alleges that backing asset claims were false

In the lawsuit, Roche Freedman argued that Tether’s claim of backing the number of its Tether tokens (USDT) by equal amounts of United States dollars was a lie. Instead, the firm says that Tether “issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices.” The document reads:

“Because the market believed the lie that one USDT equaled one U.S. dollar, Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created.”

Tether and Bitfinex expected the lawsuit

The lawsuit filing comes two days after both Tether and Bitfinex published statements confirming they had become aware of an unreleased paper “falsely positing that Tether issuances are responsible for manipulating the cryptocurrency market.”

Alleging that the paper contained “baseless accusations,” Tether and Bitfinex said that they will vigorously defend themselves if lawyers use the source to launch a lawsuit.