Burford Capital, the litigation funder whose shares lost almost half their value last week, has said trading in its shares "shows evidence consistent with illegal market manipulation".
The UK firm said traders had cancelled orders in order to deliberately depress the share price.
Burford's share price plunged after its accounting methods were criticised by Muddy Waters, a US investment firm.
Muddy Waters said the issues found by Burford "have nothing to do with us".
The City watchdog, the Financial Conduct Authority, said it was investigating the claims.
The suggestion of illegal activity raises the stakes in the conflict between Burford and those betting against its business model.
Last week, the firm said its accounting practices were industry-standard, and in its latest statement it spoke out again to defend itself.
"Burford's market-leading business today is the same as Burford was a week ago," boss Christopher Bogart said.
"What has changed is that a substantial amount of market value was wiped out by activity we believe is consistent with illegal market manipulation that has nothing to do with Burford's business. That is wrong and that is illegal."
'Spoofing and layering'
Burford lends money to support litigation cases with a view to receiving a share of the proceeds.
The company said it conducted its research into the trading in its shares with Prof Joshua Mitts of Columbia University in New York. They used London Stock Exchange data to analyse trades immediately before and after Muddy Waters' research into the firm was published.
They say traders, as yet unidentified, used two strategies to try to depress the value of Burford's shares in order to make money from so-called "short selling".
Short selling is when investors bet against a share price in the expectation that the shares will go down. It is not illegal but manipulating the price of a share is.
According to Burford, the first strategy used was "spoofing", which involves placing many orders to sell a company's stock at a price cheaper than the current cheapest price. These orders are cancelled before they can be completed. The aim is to suggest there are more sellers are in the market thus driving down the price.
Burford said the second strategy was "layering". Here, the share prices offered are higher and less likely to be met, but suggest again that a high volume of shares are available for sale, driving down prices.
Burford chief investment officer Jonathan Molot told the BBC that its analysis of the market, at around the time that Muddy Waters made its criticism of the firm public, found that trades for more than half a million shares were cancelled. He said this figure was almost as much as the average amount of the stock traded on an average day.
"We can see no non-manipulative explanation for that phenomenon," Mr Molot said.
In response to Burford's claims, Muddy Waters said: "Spoofing and layering are issues that have arisen in the high frequency and computer-driven trading world and Muddy Waters has neither the capability nor the incentive to engage in these practices. They have nothing to do with us.
"The only manipulation is that of Burford's return metrics, accounts, and disclosures. We posted an innocuous tweet the day prior to publishing our report. We were very surprised by the share price fall, so felt we had to de-risk our position given how significant a proportion of our fund it was until we fully understand what was happening. This is entirely normal and there is no market manipulation."
In a critique published last week, Muddy Waters had questioned the accuracy of Burford's accounting practices.
Speaking to the BBC's today programme on Thursday, Muddy Waters' founder Carson Block said: "I can't remember the first time we heard of Burford. It's a stock that has attracted the attention of smart money investors for a while, saying, it seems too good to be true, there's a lot of red flags."
Muddy Waters described Burford as being a "perfect storm for an accounting fiasco" with "laughter-inducing" corporate governance.
The Financial Conduct Authority said: "The FCA has been aware of these matters since the first tweet and price movements on Tuesday of last week and at that point we began undertaking wide-ranging enquiries.
"We will continue to make enquiries using the wide range of data and resources at our disposal."