Home / Ethereum / Bitcoin manipulation: DOJ in the US DOJ balances the price and Bitfinex error

Bitcoin manipulation: DOJ in the US DOJ balances the price and Bitfinex error



The US Department of Justice (DOJ) has set its sights on Bitfinex and Tether Ltd in its survey of last year's bitcoin price hikes. The Justice Department is investigating the possibility of manipulating the market, involving the use of Tether's stablecoin to increase the price of Bitcoin.

Renewed control over alleged Bitcoin manipulation requests

According to a Bloomberg report, the Justice Department is investigating whether Tether and Bitfinex are engaged in illicit trade activities aimed at driving up the price of Bitcoin last year. This DOJ probe is added to an ongoing investigation by CFTC in the activities of Tether Ltd and Bitfinex. The two governmental bodies will now begin a coordinated survey on both cryptocurrency companies.

Giving further details, Bloomberg reports that the DOJ investigation is primarily to determine whether the sudden rise in virtual currencies is the result of an actual demand or partially influenced by market manipulation. The DOJ is also studying the creation of new Tether coins and because Tether is widely published on the market through Bitfinex.

It is not clear at the moment whether DOJ is investigating only the trading activities on the Bitfinex platform or the executives of the exchange. There is no official statement by the DOJ or the Commodity Futures Trading Commission (CFTC).

Tether Ltd, the issuers of the sttecoin USDT, share a management team with the Bitfinex cryptocurrency exchange.

Constant Controversy Dogs Bitfinex and Tether

In addition to government regulators, academic experts have stated that Bitfinex and Tether are involved in market manipulation activities aimed at influencing Bitcoin prices. Recently, a professor at the University of Texas and a doctoral student published a paper related to Tether's trading activities at Bitcoin prices.

In the research paper, Professor John M. Griffin and Amin Shams claim that Tether is used to stabilize and manipulate Bitcoin prices. The report advances the statement that Tether Ltd usually creates large amounts of Tethers and deposits them in Bitfinex. When there is a decline in the price of Bitcoin, Tether's USDT in Bitfinex and other exchanges are used to buy Bitcoin to raise the price.

Apart from the fears of market manipulation, in recent months Tether has been subject to heavy controls due to the lack of certified documentation of its holdings in USD deposit. Prices collapsed temporarily in October for fear that the company did not have the reserves to back up all its coins on the market.

Image courtesy of Shutterstock.


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