Home News Research: Bitfinex might be manipulating Bitcoin price through conducting Tether inflows

Research: Bitfinex might be manipulating Bitcoin price through conducting Tether inflows

A new study released on June 13 by John M. Griffin and Amin Shams of the University of Texas blames Bitfinex cryptocurrency exchange of using the issuance of Tether (USDT) tokens “to provide price support and manipulate cryptocurrency prices”, as reported yesterday by The New York Times.

“Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices,” the paper reads.

The authors of the research also claim that half of the unprecedented Bitcoin’s $20 000 high in December was resulting from the use of the same price manipulation mechanism by Bitfinex.

This is not the first time when Tether falls under suspicion. In fact, each new release of USDT coins multiply allegations concerning Bitcoin market manipulations. Thus, Griffin’s and Sham’s hypothesis too is “likely to stoke a debate about how much of Bitcoin’s skyrocketing gain last year was caused by the covert actions of a few big players, rather than real demand from investors,” as the New York Times puts it.

Though some industry figures appeared to agree with these conclusions, fellow research firm Chainalysis claiming the results “seem credible”, influential Bitcoin evangelist Alistair Milne was more sarcastic about the whole matter:

USDT tokens are allegedly backed by USD in a 1:1 ratio. It has been long rumored, however, that there is no ground for such allegations on the part of the token issuers, as over 2 500 000 000 USDT have been issued already. The last coin release took place on March 20, when 300 000 USDT were issued. It made Tether the world’s 12-th cryptocurrency in terms of total market capitalization.

Whereas US fiscal authorities, namely, US Securities and Exchange Commission (SEC) have long been planning to audit Tether and Bitfinex for financial sustainability, both companies are not too hesitant in submitting their accounting reports to auditors. For instance, after entering into an agreement with Friedman LLP auditor company last autumn, Tether broke off the partnership under rather a controversial pretext few months later.