[LOS ANGELES] A Texas academic created a stir last year by alleging that Bitcoin's astronomical surge in 2017 was probably triggered by manipulation. He's now doubling down with a striking new claim: a single market whale was likely behind the misconduct, seemingly with the power to move prices at will. Read more at The Business Times.
Prof Griffin and Prof Shams's hypothesis that Bitcoin was manipulated is based partly on the theory that new Tethers are created without the dollars to back them and then used to buy Bitcoin, leading to rising prices.
The authors examined Tether and Bitcoin transactions from March 1, 2017 to March 31, 2018, concluding that Bitcoin purchases on Bitfinex increased whenever Bitcoin's value fell by certain increments. Prof Griffin and Prof Shams didn't name the entity on Bitfinex that they think was responsible. They shared their updated research with Bloomberg News. "This pattern is only present in periods following 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."In his statement, Tether's Mr Hoegner was adamant that the allegations laid out in the paper have no merit. "This is a transparent attempt to use the semblance of academia for a mercenary money grab," he said."Updates or not, the paper lacks academic rigor." He added that"macroeconomic experts and stakeholders in the cryptocurrency ecosystem understand that it is the global rise of digital currency that has driven the markets and demand for Tether." Both Bitfinex and Tether received subpoenas in 2017 from the US Commodity Futures Trading Commission, Bloomberg reported at the time. The Justice Department has since opened a criminal investigation into whether Tether was being used to manipulate Bitcoin. Neither the CFTC nor federal USprosecutors have accused Bitfinex or Tether of any wrongdoing.In her lawsuit, New York Attorney General Letitia James said Tether and Bitfinex executives participated in a cover-up after about US$850 million in client and corporate funds allegedly went missing. Bitfinex has said that her suit is riddled with erroneous assertions. At the heart of the attorney general's claims is Crypto Capital, a Panamanian payment processing firm that Bitfinex used to allow some customers to deposit money on the exchange. In late October, a Crypto Capital official was arrested as part of a Polish probe for allegedly laundering the proceeds of drug sales for an international crime group. The suspect, in according with Polish rules preventing the release of full names, was identified as Ivan M.L. by the county's National Prosecutor's Office. Polish media, including Radio RMF, said the suspect is Ivan Manuel Molina Lee, Crypto Capital's president. Poland deported him to Greece. Following the arrest, Tether's Mr Hoegner said in a statement to Bloomberg that"Bitfinex is the victim of a fraud and is and is making its position clear to the relevant authorities, including those in Poland and the United States".
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