Tether and Bitfinex Denounce Market Manipulation Study 

The contents of a controversial report about the 2017 cryptocurrency bull run have led to a rousing debate of late. The report, which was cleverly titled “Is Bitcoin Really UnTethered?” was written by John Griffin and Adam Shams, both serving as Professors at the University of Ohio. The professors claimed that the entire surge that saw the price of Bitcoin climb as high as $19,600 in the second half of 2017 was due to a manipulation of the Tether (USDT) crypto asset. 

A lone whale caused prices to spike 

However, in a revised edition of their paper, the academics made a heel turn, claiming that the bull run was instead the result of a whale (usually referred to people who own so much of an asset that any action they make could have lasting effects on its price) who has been pulling strings behind the scenes. The men went on to claim that this unnamed whale was able to cause the Bitcoin price to surge as high as it went, thanks to the Tether manipulations pointed out in the original version.

In an interview with Bloomberg, the university academicians 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 and Bitfinex Fire Back 

However, while many crypto naysayers have been quick to tout this as further evidence of why Bitcoin doesn’t have any credible value, Tether Inc., the company behind the USDT token, has come out to refute the findings and clear its name. In a heavy-worded response published on its website on November 7, the stablecoin operator called the Griffin and Shaams updated report a “weakened yet equally flawed version of their prior article” that was released to gain publication at their expense.  

According to a Wall Street Journal report, the authors of the report seemed to insinuate that the lone hale in question was Bitfienx, a cryptocurrency exchange that is owned by iFinex Inc., the same parent company that controls Tether. 

“If it’s not Bitfinex,” Griffin reportedly told the journal, “it’s somebody they do business with very frequently.”

The exchange responded with a similar rebuttal on its website, attacking any innuendos that the authors of the report made concerning its role in the market manipulation. 

“The purported conclusions reached by the authors are built on a house of cards that suffers from the absence of a complete dataset. As an example of one of many deficiencies, the authors openly admit they do not have accurate data on the crucial timing of transactions or the flow of capital across different exchanges,” the exchange added.  

Given the manipulation and fraud case that both companies are embroiled in with the New York Attorney General’s Office (NYAG), further fraud allegations are undoubtedly more weight than they can carry at the moment. The NYAG has accused Bitfinex of losing up to $850 million without cause, then lying to investors and covering up with its Tether reserves. 

In the midst of all that, both companies were also named in an October 2019 class-action lawsuit, which alleged that they had manipulated markets, lied to investors, and covered up proceeds.