Investors say Bitfinex, like Alameda, had negative balance override
Bitfinex, like Alameda Research, allegedly permitted special customers to trade with negative account balances, according to a second amended consolidated class action complaint in the Southern District of New York. However, before comparing the negative balance override features of Bitfinex and Alameda, it’s important to contextualize this allegation. Details about Bitfinex’s negative balance override comes from a lawsuit alleging a scheme involving the use of tether (USDT) to persist a price premium of bitcoin (BTC) on Bitfinex. Specifically, a class of harmed investors residing in the US claim that Bitfinex and Tether executives fraudulently inflated the price of bitcoin and other crypto assets by billions of dollars on the Bitfinex exchange for two years. Class members who bought bitcoin on Bitfinex at artificially inflated prices and later sold bitcoin at natural market prices “were injured by the amount of the difference,” according to their complaint...