Bitcoin is plunging faster than the RMS Titanic, and the Department of Justice is looking into whether the drop has anything to do with Bitcoin’s alleged ties to the stablecoin Tether.
A Stronger, Better Past… Sort of
We all remember the glory days of Bitcoin during December of last year. The currency was at the top of everybody’s investing list after it nearly struck the $20,000 mark during the final few weeks of 2017. Unfortunately, the currency has been trapped in a downward spiral ever since, and there are rumors of something foul afoot.
The U.S. Justice Department began a broad investigation earlier this year following reports that Bitcoin’s sudden price explosion in 2017 was somehow caused by manipulation. University of Texas finance professor John Griffin ultimately produced a document alleging that every time the cryptocurrency fell during 2017 even by a small margin, Tether was used to purchase new BTC, thereby tying it to a stable currency and potentially boosting its price.
We’re Watching You…
Now, that once broad investigation has become a little more focused, with representatives of the department looking into whether that web of lies, deceit, and mystery might include the crypto exchange Bitfinex, which they believe may have been at the center of the action. The DOJ is claiming that Bitfinex may have been used to illegally move prices based on reports from three separate individuals they say are “familiar with the matter.”
One of the big factors contributing to Tether’s guilty appearance is that it shares the same management team as Bitfinex. Whenever new coins appear, they usually appear first on the exchange, and some are saying that new Tether coins are being used to purchase bitcoin in droves to push its price forward.
Maybe Nothing Happened…
CEO of both Tether and Bitfinex JL van der Velde has repeatedly denied these claims and refuted the DOJ’s findings, saying:
Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex.
Late last year, both Bitfinex and the Tether Ltd. received subpoenas from the U.S. Commodity Futures Trading Commission (CFTC). At the time of writing, it is unclear if the Justice Department is simply investigating the companies, or if they are also examining the executive staffs. Neither the Justice Department nor the CFTC have accused either venture of any illicit wrongdoing as of late, and this investigation is simply to garnering information.
Who Are You, Exactly?
Among the specific items the DOJ is looking to examine is how Tether issues new coins, and whether the currency is truly backed by USD as it claims. Officials are also looking to see if spoofing – an illegal practice of flooding the market with fake orders to get investors to buy – was used to boost the bitcoin market last year.
Do you think Tether is what it claims to be? Why or why not? Post your comments and thoughts below.
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