These claims were first made in 2017 in a study by academics John Griffin and Amin Shams, following a surge in interest in bitcoin, which saw a single unit of the cryptocurrency worth up to ‘at $20,000.
Mr Griffin and Mr Shams are now doubling down on their earlier claims, saying the manipulation was caused by a single actor using tether “stablecoin” – a cryptocurrency designed to be worth US$1.00 and which would still be backed by equivalent assets – to artificially increase the price of Bitcoin.
“By mapping the Bitcoin and Tether blockchains, we are able to establish that a large player on Bitfinex is using Tether to purchase large quantities of Bitcoin when prices fall and after Tether is printed,” they wrote M. Griffin and M. Shams in the study. .
“These price support activities are successful as bitcoin prices increase after the intervention periods.”
The report claims that the stablecoins used to purchase Bitcoin were actually not collateralized. This has been a point of contention for Tether for some time, with the company failing to deliver on its promises to audit its assets.
However, Tether – along with a number of industry figures and experts – have rejected the report’s claims.
“Tether and its affiliates have never used Tether tokens or issuance to manipulate the cryptocurrency market or the price of tokens,” the company wrote in a statement on bitcoin exchange Bitfinex.
“All Tether tokens are fully backed by reserves and are issued in accordance with market demand, not for the purpose of controlling the price of crypto assets. It is reckless – and completely false – to claim that Tether tokens are issued in order to enable illicit activities.
Jeremy Allaire, CEO of Circle, a peer-to-peer crypto payments company, wrote that the study was flawed and refuted the claim that a single entity could be responsible for manipulating the price of bitcoin.
“Exchanges use omnibus wallets that aggregate all customer balances and transactions on and off the exchange,” Allaire wrote on Twitter.
“So, an analysis showing that a “single wallet” was involved in flows from Bitfinex to other exchanges makes no sense. All this shows is that the traders were trading.
The report also does not take into account a number of other factors involved in the rise in the cost of bitcoin, including the explosion of public interest that has seen large numbers of speculators buying the cryptocurrency.
