Tether Appoints Phillip Gradwell as Head of Economics Amid Market Manipulation Lawsuit

Stablecoins remain a crucial focus for digital asset regulators and the public. Their backing and dollar peg are some of the areas of interest.

Stablecoin issuer Tether has appointed Phillip Gradwell as Head of Economics, a move that comes amid a lawsuit alleging market manipulation involving USDT.

Gradwell joins Tether from blockchain analytics firm Chainalysis, where he spent six years as chief economist. His experience engaging regulators and analyzing digital asset adoption will be crucial for Tether, especially considering the ongoing lawsuit.

In a statement on Monday, Tether noted Gradwell’s expertise in measuring digital asset activity and communicating with regulators, which will be key to the firm's mission. He will also help Tether advance its understanding of digital asset adoption, focusing on how USDT supports dollar hegemony.

“As the first and most widely used stablecoin, USDT conveniently and securely brings the US dollar to people globally. This enhances the liquidity and stability of the US financial system. It also reinforces the role of the dollar in global finance, thereby supporting dollar hegemony. Philip’s expertise will enable Tether to bring even further understanding to our indispensable role in supporting the dollar,” Tether CEO Paolo Ardoino wrote.

The interest in Gradwell's experience comes as part of an ongoing class-action lawsuit, which alleges that Tether and Bitfinex conspired to manipulate cryptocurrency prices using USDT stablecoin. The lawsuit, filed in 2019, claims that Bitcoin is among the cryptocurrencies whose prices the defendants manipulated.

The plaintiffs claim that Tether and Bitfinex "executed a sophisticated scheme to fraudulently inflate the price of cryptocurrencies, including Bitcoin. They orchestrated massive, carefully timed purchases […] to signal to the market that there was enormous demand. Thus, caused the price of those commodities to spike," an excerpt in the court documents reads.

In turn, the plaintiffs claim that Tether and Bitfine benches violated the Commodities Exchange Act (CEA) and the Sherman Antitrust Act. They also challenge the stablecoin's status, arguing that its one-to-one backing by the US dollar is false.

“In reality, Tether issued billions of USDT to itself with no US dollar backing — simply creating the USDT out of thin air. This ultimately resulted in billions of dollars of damage to innocent crypto commodity purchasers,” the plaintiffs allege.

The lawsuit has seen several delays, amendments and settlements since its filing. In 2021, Tether signed a $18.5 million settlement with the New York Attorney General over USDT backing. Later in October 2021, the US Commodity Futures Trading Commission (CFTC) also imposed a $41 million fine against Tether in the same matter.

Throughout the ongoing litigation, both Tether and Bitfinex have maintained that the plaintiffs lack evidence to support their claims of market manipulation. Nearly three weeks ago, Judge Katherine Failla of the US District Court for the Southern District of New York permitted the plaintiffs to proceed with a proposed Second Amended Complaint. Despite this, Tether remains confident in its defense, believing that the plaintiffs' “conspiracy theories” will ultimately be rejected.

“The decision does not suggest that plaintiffs’ claims have any merit, as leave to amend a complaint is freely granted and the Court must accept plaintiffs’ allegations as true, however baseless they might be in reality. As with the prior complaint, the claims asserted in plaintiffs’ proposed amendment are wholly without merit. Ultimately, it is the facts and evidence that matters, not plaintiffs’ false and misleading allegations,” Tether stated.

This development highlights the ongoing tension between crypto firms and industry regulation. Tether's onboarding of Gradwell's knowledge and experience reflects its commitment to defending its position and bringing in personnel with skill sets that could deliver a favorable outcome.

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