Academic Paper Alleges Record Price Of Bitcoin Last Year Was Manipulated


According to an academic research paper Bitcoin (BTC) as well as other virtual currencies reached record highs last year partly as a result of price manipulation. The academic paper is co-written by University of Texas? Ph.D. student, Amin Shams, and the institution?s finance professor, John Griffin, who has a history of detecting fraud in the financial markets.

Towards the end of last year players in the sector expressed concerns that prices of cryptocurrencies were being boosted to some extent by activity on digital currency exchange Bitfinex. The crypto exchange has offices though it is registered in the Caribbean. Shortly after concerns were raised regulators from the United States subpoenaed Bitfinex which is one of the biggest but least regulated crypto exchanges in the world.

Distinct patterns

Before coming to his conclusion Griffin studied the digital token flow at the exchange and spotted distinct patterns which suggested that there were efforts at the exchange to push up the prices while they were falling at those of rivals. In order to achieve this a stablecoin whose price is pegged to the United States dollar called Tether (USDT) was used to purchase other cryptocurrencies. Tether is a creation of Bitfinex. In a statement the chief executive officer of Bitfinex, Jan Ludivicus van der Velde, denied that the crypto exchange was involved in the manipulation of prices.
The academic paper solely relies on transaction records which are available on public ledgers and does not have documents or emails which prove that the crypto exchange was responsible for the manipulation of prices.

New tokens

Last month Tether issued new USDTs worth approximately $250 million further generating controversy. The stablecoin has previously refused to have an audit undertaken after it severed ties with Friedman LLP, an auditing firm. With regards to stablecoins Tether is almost a monopoly. Tether?s total supply is currently 2.5 billion and critics doubt that all the tokens in circulation are backed by United States dollars.
In May this year cryptocurrency exchange Binance listed another stablecoin known as TrueUSD (TUSD) pairing it with the US dollar as well as with Tether thus giving users an alternative which actually undergoes third party audits.

Disclaimer: Nothing in this article should be construed as financial advice in any way, nor as an encouragement to engage in cryptocurrency trading activity. This article was not sponsored by any entities or companies mentioned in the article. The only purpose of this article is to inform/educate on the topics discussed in the article.

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