Tether Manipulation Pushed Up Bitcoin's Price, Researchers Find

Galtero Lara
Junio 13, 2018

There is evidence that tether, a digital currency pegged to the USA dollar, may have been used to manipulate the price of bitcoin (BTC=BTSP) and other cryptocurrencies, according to a research paper released by the University of Texas on Wednesday. The Commodity Futures Trading Commission and the U.S. Department of Justice have been investigating whether bitcoin and other cryptocurrency prices are being manipulated, Bloomberg reported last month.

Regulators worldwide are increasing their scrutiny of cryptocurrency markets.

The Commodity Futures Trading Commission subpoenaed both Bitfinex and Tether in December, over concerns about if Tether is actually by the reserve of US dollars it claims it has. The reason for the subpoena was unclear. Neither Tether nor Bitfinex have been accused of wrongdoing. "Bitfinex nor tether is, or has ever, engaged in any sort of market or price manipulation". 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. It was at $6,624.45 on Wednesday afternoon.

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Scientists at the University of Texas analysed transactions on Bitfinex, where Bitcoin can be bought and sold and identified patterns which suggest that the prices were successfully pushed up when they slumped at other exchanges, by using another virtual currency called Tether.

The researchers used algorithms to analyze data from blockchains, the decentralized ledgers that underpin bitcoin and other virtual currencies, between the beginning of March 2017 to the end of March 2018. Executives at the company previously denied any involvement in price manipulation, The New York Times reports, though did not respond to a request for comment by the newspaper over the study.

However, the two notably discovered that it does not take a large amount of tether to prop bitcoin's price - "even less than 1 percent of extreme exchange of tether for bitcoin has substantial aggregate price effects", the study said.

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