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Lone Bitcoin Whale Likely Fueled 2017 Price Surge, Study Says:
A Texas academic created a stir last year by alleging that Bitcoin's astronomical surge in 2017 was probably triggered by manipulation. He's now doubling down with a striking new claim: a single market whale was likely behind the misconduct, seemingly with the power to move prices at will.
One entity on the cryptocurrency exchange Bitfinex appears capable of sending the price of Bitcoin higher when it falls below certain thresholds, according to University of Texas Professor John Griffin and Ohio State University's Amin Shams. Griffin and Shams, who have updated a paper they first published in 2018, say the transactions rely on Tether, a widely used digital token that is meant to hold its value at $1.
"Our results suggest instead of thousands of investors moving the price of Bitcoin, it's just one large one," Griffin said in an interview. "Years from now, people will be surprised to learn investors handed over billions to people they didn't know and who faced little oversight."
Tether rejected the claims, with General Counsel Stuart Hoegner arguing in a statement that the paper is "foundationally flawed" because it is based on an insufficient data set. The research was probably published to back a "parasitic lawsuit," the general counsel added.
[...] Griffin and Shams's hypothesis that Bitcoin was manipulated is based partly on the theory that new Tethers are created without the dollars to back them and then used to buy Bitcoin, leading to rising prices. The authors examined Tether and Bitcoin transactions from March 1, 2017 to March 31, 2018, concluding that Bitcoin purchases on Bitfinex increased whenever Bitcoin's value fell by certain increments. Griffin and Shams didn't name the entity on Bitfinex that they think was responsible. They shared their updated research with Bloomberg News.
[Ed Note: If, like me, you didn't understand the term 'Whale' in the title then try this link for an explanation.--JR]
(Score: 1) by khallow on Tuesday November 05 2019, @01:48AM (2 children)
Who even knew Tether existed prior to this story? Crashes like the 2017 one are standard dynamics for bubble markets. That it turns out to be this particular shifty venue is not a surprise, but I don't anyone aside perhaps from said whale buyer could have told you when the market crash was going to happen or precise details of why.
(Score: 2) by ikanreed on Tuesday November 05 2019, @02:26AM
I did, in 2016.
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @06:36AM
khallow, Lorde of the Free Market, and he did not know about Tether before the crash? I suspect collusion, or lies, or both. khallow knew it was going to happen. He is "in on it"! Furken libertarian market fixers and inside information scammers! Damn your eyes, khallow! I lost my house, my retirement, my wife, and six of my five horses over this! You scumbag bastard! Do you not know that your manipulation of markets results in real harm to real people, who may, when they realize you are responsible, hunt you down and kill you? What? Never thought of that? Be vigilant, my former friend.