Bitcoin Price was Manipulated by Tether, Researchers Claim

Bitcoin's remarkable run last year may have been smoke and mirrors

Bitcoin's remarkable run last year may have been smoke and mirrors

In his paper, Griffin says that the United States 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.

The algorithms the two developed were able to "cluster groups of related bitcoin wallets", according to the study.

"Tether seems to be used both to stabilize and manipulate Bitcoin prices", according to the study, which was released on Wednesday.

Griffin's study didn't have access to email, texts or other communications that would provide evidence that both organizations were involved in price manipulation, but instead analyzed transaction records stored on Bitcoin's public ledger.

With intentions to investigate the price outsets of Tether to Bitcoin, they choose the sample of 87 of the largest purchases of Bitcoin with Tether from March 2017 to March 2018.

Regulators worldwide are increasing their scrutiny of cryptocurrency markets. Such price supporting activities are successful, as Bitcoin prices rise following the periods of intervention. Since exchanges often face difficulties finding the banking partners and achieving the regulatory compliance necessary to offer fiat-to-crypto trading pairs, many altcoin exchanges use tether as a proxy for physical Dollars.

"Overall, we find that Tether has a significant impact on the cryptocurrency market".

In December, the CFTC sent subpoenas to Tether and Bitfinex, a popular cryptocurrency exchange that is affiliated with, and shares executives with, Tether.

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.

Tether has always been accused of being insolvent, as they have been unable to provide legitimate audits, breaking off their relationship with their auditor earlier this year. A follow-up investigation from Bloomberg found that Bitfinex and Tether are likely banking with Noble, but neither company has confirmed it publicly.

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