Published: Wed, June 13, 2018
Markets | By Otis Pena

Bitcoin Price was Manipulated by Tether, Researchers Claim

Bitcoin Price was Manipulated by Tether, Researchers Claim

The paper by John Griffin, a finance professor at the University of Texas who has researched fraud in other markets, and graduate student Amin Shams, found that the virtual coin Tether was likely used to prop up Bitcoin prices late previous year. In his paper, Griffin says that the U.S. dollar-pegged cryptocurrency tether was used to buy bitcoin at the times that the latter was falling, which helped "stabilize and manipulate" the cryptocurrency's price.

As evidence for this claim, the Griffin and Shams note that there tends to be negative end-of-month pressure on the bitcoin price in months when a large number of tethers have been issued but not in others. That's according to explosive new research from University of Texas finance processors John Griffin and Amin Shams, best known for identifying suspicious activity in the VIX a year ago. Twitter accounts and websites such as Tether Printer which tracks the movement of new tokens issued by Tether's central organization show that millions of dollars' worth of USDT were printed through the 2017 and early 2018 market seasons - correlated with the rise of Bitcoin and other cryptocurrencies.

Bitcoin Price was Manipulated by Tether, Researchers Claim

The US Commodity Futures Trading Commission allegedly sent Tether - as well as cryptocurrency exchange Bitfinex, with whom it is closely affiliated - a subpoena in December, though it is not clear whether that investigation has or will result in any enforcement action. Neither Tether nor Bitfinex have been accused of wrongdoing.

Industry players had questioned if Tether, a virtual "stablecoin" that aims to create a digital currency equivalent of the US dollar, and the cryptocurrency exchange Bitfinex played a part in Bitcoin's explosion in value in late 2017 and early 2018. "Bitfinex nor tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances can not be used to prop up the price of bitcoin or any other coin/token on Bitfinex", he said.

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