US Officials Are Probing Tether Role in Bitcoin Market Manipulation

  • US Officials Are Probing Tether Role in Bitcoin Market Manipulation

US Officials Are Probing Tether Role in Bitcoin Market Manipulation

According to a Bloomberg report, the DOJ is inquiring whether Tether and Bitfinex engaged in illicit trading activities aimed at driving up the price of Bitcoin previous year.

It seems U.S. authorities aren't yet done with controversial cryptocurrency Tether.

Bloomberg cited sources that have alleged that these Tethers could have been used to buy bitcoin at crucial moments when the value of "more ubiquitous digital token dips".

The Commodity Futures Trading Commission (CFTC) originally subpoenaed the two businesses in January this year, months later denying a freedom of information request to examine what exactly the regulator thought had occurred which was against the law.

According to the unnamed sources, prosecutors have "recently homed in on suspicions that a tangled web involving Bitcoin, Tether and crypto exchange Bitfinex might have been used to illegally move prices".

A focus of the Justice Department's investigation is whether the dramatic rise of digital tokens in recent years was purely driven by actual demand, or was partially fanned on by market tricks.

Shortly after the DoJ launched its probe, academic researchers from the University of Texas released a scathing 66-page report claiming they had discovered data that suggested Tether was printed and used following "market downturns", which resulted in "sizable increases in Bitcoin prices".

It is unclear at this time whether the DOJ is only investigating trading activities on the Bitfinex platform, or the executives of the exchange as well.

Uncertainty surrounding Tether recently led to the price of Bitcoin becoming out of sync across cryptocurrency exchanges, depending on if the exchange offered a trading pair against BTC tied to Tether, or tied to United States dollars. The report advances the claim that Tether Ltd usually creates large amounts of Tethers and deposits them in Bitfinex. "Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies".

Apart from market manipulation concerns, Tether has come under heavy scrutiny in recent months over lack of audited records of its Dollars escrow holdings.

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