University of Texas Study Links Tether To Bitcoin Price Manipulation

14 Juin, 2018, 03:20 | Auteur: Auguste Feret
  • Record bitcoin price propped up by another digital currency

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.

Why did Bitcoin and several other cryptocurrencies suddenly balloon in value past year? Price manipulation and collusion may be to blame. 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.

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. The published study states that the researchers used "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 manipulation was so successful that it accounted for at least 50 percent of the gains Bitcoin and other cryptocurrencies such as Ethereum made over the previous year.

While there is little public information on about how Tether was created, it generally exchanges for around $1 as each coin is supposed to be backed by $1 of fiat money in a bank.

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"Across the six other crypto currencies, returns are 64 percent smaller on average when removing the 87 Tether-related [purchases]", the researchers added.

Regulators worldwide are increasing their scrutiny of cryptocurrency markets. This allowed the researchers to map how tether was distributed, and how it impacted bitcoin prices. The paper does not prove definitively that Bitfinex was tangled in price manipulation, but the evidence gives a strong indicator that it was involved.

"Tether is "pushed" through a supply-driven scheme to make up a currency, convert it into Bitcoin, and then manipulate the price of Bitcoin and other cryptocurrencies.".

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. "Bitfinex nor tether is, or has ever, engaged in any sort of market or price manipulation".

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