The US Department Of Justice has vamped up investigations into the Tether token amid allegations of its use in partnership with Bitfinex to artificially pump the price of Bitcoin.
The Tether crypto token was also released by the same company that developed the Bitfinex platform. While it may seem like any other altcoin on the market right now, the coin has been the subject of allegations regarding its use in price manipulation particularly of the bitcoin markets. Both Bitfinex and the Tether company have the same parent company located in Hong Kong. It has been brought to the attention of the community that tether was used in buying up bitcoin when the own coins value wasn’t looking attractive.
Furthermore the exchange hasn’t officially responded to any of the claims and allegations made. The paper which was published by Professor John Griffin and Amin Shams also outlined the scale of pumping which occurred last year due to the suspicious activity occurring on the Bitfinex exchange, as the trading could have inflated bitcoin prices by 700%.
On the other hand the CEO van der Velde stated :
“Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.”
The legitimacy of the Tether token has also been called into question recently by the CTFC. The company has claimed that for every token, it has 1USD available in banks. Despite calls by the CTFC to prove this fact, results are yet to be confirmed.
Echoes of the past
The situation is no different to previous price manipulation of bitcoin markets which occurred early on in the cryptocoins history. Orchestrated by the likes of MtGox, the now defunct crypto exchange, bitcoin was pumped with prices being inflated by bots on the site referred to as “willy”. Sadly these allegations have never been legally confirmed or individuals responsible prosecuted.