BY CNA Team - November 21, 2018
Tether and Bitfinex focus of fresh investigations
The US Justice Department is now focusing on the links between Tether, the startup behind the stablecoin, Bitfinex, the Hong Kong-based crypto exchange and price manipulation of bitcoin.
Bloomberg says in a Nov 20 report that US investigators are now looking to whether last year’s bitcoin price rally was fuelled by manipulation, with traders driving prices up with tether.
The news wire quoted three sources saying that investigators are now focusing on how bitcoin’s price have been manipulated and the involvement of Tether and Bitfinex, two startups that share common shareholders and management.
There have been allegations that the tether stablecoin has been used to prop up bitcoin’s price on dips, although Tether and Bitfinex CEO JL van der Velde has rejected such claims.
The latest probe is additional to an investigation into possible misconduct by both firms, which received subpoenas last year from the US Commodity Futures Trading Commission (CFTC).
The Justice Department and CFTC are coordinating their investigations although Bloomberg says it is unclear whether investigators are solely looking into activity that occurred on Bitfinex or if exchange executives are suspected of illegal behaviour.
The news wire noted that both the Justice Department and CFTC has not accused anyone of wrongdoing and they may conclude that nothing illegal occurred.
Tether claims that every tether is backed by US$1, although there have been doubts over this claim as the firm has not gone through a proper audit.
News of the probe together with recent crackdowns by US regulators on initial coin offerings have further affected already fragile market sentiments.
Image courtesy of Tether and Bitfinex website.