A research paper published last year claimed that the massive bull run towards the end of 2017 was triggered by manipulation. The paper was authored by John Griffin, a professor from Texas University and Amin Shams from Ohio State University. Now, they have doubled down on their claims and updated their research to assert that the manipulation was not caused by multiple whales working in sync to pump the prices, but it was the job of a single large whale who had the power to move the prices at will, reported Bloomberg.
Another startling claim made in the updated research points a finger towards Tether and Bitfinex who have often been accused of pumping Bitcoin price. The study claimed that the Bitfinex exchange had the capability to pump the price of Bitcoin whenever it fell below a certain market threshold.
Professor Griffin during an interview said,
‘Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one. Years from now, people will be surprised to learn that investors handed over billions to people they didn’t know and who faced little oversight.”
Tether denied any such involvement in the manipulation of Bitcoin price and ridiculed the study claiming it to be fundamentally flawed. They said the data set used for the analysis was inadequate and even said that the study was published to give fuel to the fire in the ongoing lawsuit against them.
Bitfinex and Tether have the same parent company, the largest derivative exchange used its Tether reserves to manipulate its yearly losses of over $850 million. When the irregularities in the financial book was found Bitfinex claimed it loaned the Tether. New York State Attorney office filed a lawsuit against Bitfinex for manipulating their losses and the case is still going on.
Tether has been controversy's favorite child in recent years, where right after the lawsuit it withdrew its claim that each USDT is backed by the dollar and later clarified that only 70% of the supply is backed by reserves.
The research study claiming that Tether is responsible for pumping Bitcoin price revolve around the same theory. The study claims since all of USDT is not backed by its dollar equivalent, Tether prints USDT using which people buy Bitcoin which fuels its price.
The research paper analyzed Tether and Bitcoin transactions between March 1, 2017 and March 31, 2018, and concluded that each time Bitcoin price fell below key support, Bitcoin purchase on Bitfinex had risen.
The research read,
“This pattern is only present in periods following the printing of Tether, driven by a single large account holder, and not observed by other exchanges,”
they wrote in their new peer-reviewed paper, set to be published in a forthcoming Journal of Finance.
“Simulations show that these patterns are highly unlikely to be due to chance. This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.”
Tether Denies All Claims
Tether's General Counsel Stuart Hoegner asserted that the allegations levied against Tether is baseless and have no merit. He went on to claim that the paper lacks “academic rigor” and was an “attempt to use the semblance of academia for a mercenary money grab.”
He stated further,
“macroeconomic experts and stakeholders in the cryptocurrency ecosystem understand that it is the global rise of digital currency that has driven markets and demand for Tether.”