Business

Dan Taylor

Was Tether used to prop up BTC? US wants to know

With Bitcoin Core (BTC) continuing its descent into irrelevance, the highs of near $20,000 from the end of last year feel more distant than ever. But the U.S. Department of Justice (DOJ) has cast fresh doubt on whether BTC was ever worth as much as its market price, after identifying irregularities that suggest market manipulation.

Federal prosecutors opened their probe into BTC markets several months ago, and continue to investigate the shady goings on behind the market price, Bloomberg reported.

Now, new evidence has emerged of alleged price manipulation, thought to involve stablecoin Tether and crypto exchange Bitfinex, which is suspected of having been involved in outright manipulation of BTC’s price.

Bitfinex and Tether share a management team, and there have been numerous suggestions of investors buying up Tether tokens when the price of BTC dips, as part of an elaborate attempt to illegally shift market prices.

While the claims have previously been rejected by Bitfinex CEO JL van der Velde, the Justice Department probe makes the allegations even harder to ignore.

The probe adds another strand of investigation into the DOJ’s wider exploration of the management of Bitfinex and Tether. Last year, both firms were subpoenaed by the Commodity Futures Trading Commission (CFTC), which is known to be working in collaboration with the Justice Department as part of the investigations.

It is worth noting that neither the CFTC or the Justice Department have formally accused either firm of wrongdoing, though there seems to be mounting evidence that some of their suspicions could be proved correct.

The development comes at a time of disastrous trading for BTC, with prices plummeting as low as $4,225 on Tuesday, in what looks certain to cement the downward slide that has dominated this year.

Alongside market pessimism over the fundamental weaknesses in the token, the increasingly vocal criticisms from regulators have only hastened its decline.

Responding to the criticisms, van der Velde said that coins issued by Tether could not be used to prop up BTC prices, stressing, “Tether issuances cannot be used to prop up the price of [BTC] or any other coin/token on Bitfinex.”

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