Economy

Tether Directly Used to Manipulate Bitcoin Price, Finds Study

Tether Directly Used to Manipulate Bitcoin Price, Finds Study”

The study, by University of Texas finance professor John M. Griffin and graduate student Amin Shams, explored how digital currency Tether could have been used to inflate prices of other cryptocurrencies. 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.

John Griffin and Amin Shams, in their research article, 'Is Bitcoin really Un-Tethered?' aim to investigate the relation between Bitcoin, other cryptocurrencies, and Tether, a cryptocurrency purportedly clinched to the USA dollar that carries more transaction volume than dollars. 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. 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. Neither Tether nor Bitfinex have been accused of wrongdoing. 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". They set out to know how less than 1% of hours with heavy Tether activity can explain nearly half of the meteoric rise in Bitcoin.

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.

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

Questions about Tether and Bitfinex have dogged the cryptocurrency world since previous year, when Bitfinex lost banking relationships yet continued to operate, Bloomberg reported.



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