Is Tether responsible for declines on bitcoin, and previously generating a bubble?

Once again this year there is a controversy regarding Tether. The US Department of Justice (DOJ) suggests that stablecoin was responsible for Bitcoin’s increases in 2017. So, was the last bubble artificially generated?

The US prosecutor’s office suspects that Tether has been used by the Bitfinex cryptocurrency stock exchange to manipulate virtual currency prices in the past year.

Combining Bitfinex with stablecoin is nothing new. The stock exchange team is the same as the manager of Tether Ltd. New coins are issued on Bitfinex. The stock market itself does not comment on the allegations.

Fake bull market?

The Department of Justice’s main investigation concerns the question whether the strong increase in the number of digital tokens in recent years has been caused by real demand or was the result of market tricks. As part of the investigation, a number of well-known commercial strategies were analyzed, including, for example, spoofing, i.e. the illegal practice of flooding the market with artificial orders to deceive other participants.

Tether is still used today by investors to transfer funds between cryptocurrency exchanges without having to make bank transfers. It is an alternative to Fiat, because as a stablecoin it has a constant value, although the last controversy has shaken its course.

Department of Justice, among others analyzes how Tether Ltd. creates new coins and why they enter the market mainly through the Bitfinex exchange.

Earlier in the middle of this year, the United States Department of Justice initiated criminal proceedings to determine whether investors manipulate Bitcoin and other digital currencies. Later, evidence was found that increases in BTC valuation are correlated with the creation of Tetra.

Is it really so? The case resembles the affair of Willy’s bot on the now-defunct stock exchange Mt. Gox. The operation of the bot supposedly also generated increases in BTC on the largest cryptocurrency stock exchange at the time.

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