- Prosecutors Probing Bitfinex and Tether
- Allegations suggest that price manipulation could have caused recent drop in price
- Investigation to determine if Bitcoin ATH Price Was A Manipulation Or Not
After Bitcoin’s great fall in the past days and week, a lot of uncertainty has arisen – and with it, scrutiny. Now the U.S. Justice Department is trying to probe Bitfinex and Tether Ltd. The duo is alleged to have manipulated the price of Bitcoin in 2017. Therefore, the federal prosecutors are currently investigating if there was more to the hike in Bitcoin’s price other than the speculations of crypto enthusiasts.
Uncertainties About Who Should Be Investigated
At the moment, a particular person or group of persons have not been singled out for the crime. That is to say; there is still some doubt if its the exchange that is being investigated or the illegal activities that may have taken place within it. The prosecutors are trying to determine if Bitcoin’s all-time high of $20,000 was purely from demand or as a result of market manipulations such as the use of fake orders.
It can be recalled that it was in the last quarter of the year that the cryptocurrency experienced a sudden hike in price. While this may have been a good thing for most people, it’s negative impact is what we may still be experiencing today. Now, if you’re wondering where Tether falls into all this chaos, then here’s what you should know.
Tether May Have Been Used to Manipulate Bitcoin’s Price
Tether is a stable coin that is backed by the dollar. It is less volatile than other digital assets like Bitcoin and Ethereum. Its stability makes it an easy target for those who may want to manipulate the market by buying large quantities of Bitcoins with it. The result is that even if the price of Bitcoins changes, the value held in Tether will most likely be the same.
According to some traders, when the value of Bitcoin depreciates, this stablecoin is used to buy it. Nevertheless, JL van der Velde, the chief executive officer of Tether Ltd. and Bitfinex has denied this claim. There has been no word or comment from Bitfinex’s and Tether Ltd’s general counsel regarding these allegations about their client.
This is not the only case against Bitfinex. Last year the U.S. Commodity Futures Trading Commission subpoenaed Tether Ltd. and Bitfinex. Since Bitfinex’s team is the same that manages Tether Ltd, the exchange was asked to provide evidence that it had $2.3 billion held in reserve for the – at the time – 2.3 billion tokens in circulation.