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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 fustakrakich on Monday November 04 2019, @07:17PM
This is how you deal with a whale [youtube.com]
La politica e i criminali sono la stessa cosa..
(Score: 3, Interesting) by ikanreed on Monday November 04 2019, @07:49PM (4 children)
But every person who saw the crash coming knew Tether was pitching IOUs disguised as USD to buoy the price of bitcoin. But congrats to a couple exchanges for getting to play Federal Reserve for a year; that must have been fun.
(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.
(Score: 3, Informative) by AnonTechie on Tuesday November 05 2019, @09:47AM
Just saw a detailed article about the role of Tether in this scam. Some may enjoy reading it.
The Trillion Dollar Lawsuit, Part One [substack.com]
Albert Einstein - "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."
(Score: 2) by hemocyanin on Monday November 04 2019, @08:11PM (8 children)
On one level it doesn't see untoward -- many people who have a stock they are attached to and hold for a long time period, buy when the price on that stock goes down. This sounds like a bitcoin believer doing a similar thing.
On a different level though, I don't understand "tether" -- is it backed by dollars or just magically zinged into existence and then used to buy bitcoin? That feels scammy but I don't have the economic background to articulate that feeling.
(Score: 1, Informative) by Anonymous Coward on Monday November 04 2019, @09:02PM (1 child)
That's exactly the point of this article. Supposedly "tether" is a Commodity Money [wikipedia.org], where each TetherCoin (or whatever) has an equivalent dollar somewhere (I know dollars are a fiat currency, but in this context they are pegging the tether to it, so effectively it is the stable source of value).
The article and study are saying that this is not true, and that tether is just printing coins as they go, effectively being a Fiat Money [wikipedia.org], and are trading under false pretenses. In other words, "yeah, each Zimbabwe Dollar is absolutely equal to one US Dollar, trust me."
Tether is disagreeing, and saying the study is flawed.
If the article and study are true, then you are right, it is scummy. It is false advertising in the least, if not fraud, or other worse should-be-crimes-but-BitCoin-isn't-regulated-so-good-luck-with-that.
If Tether is right, than this is really slanderous/libelous claims.
Regardless, it represents an existential threat to tether, as if people lose faith in its value, it goes to 0.
(Score: 1, Informative) by Anonymous Coward on Monday November 04 2019, @09:06PM
Sorry... I meant to say tether was allegedly Representative Money [wikipedia.org].
To answer your literal question, theoretically it would mean every new TetherCoin in existence, they would be on the hook to give you a dollar if you wanted it... You could go to them and say "here's my coin, give me a dollar," and they'd give you one, either from their reserve, by selling a hamburger and giving you the profit, getting a bank loan, or whatever.
(Score: 4, Funny) by MostCynical on Monday November 04 2019, @09:22PM (3 children)
If you can explain it easily, it isn't finance (or economics)
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 4, Interesting) by JoeMerchant on Monday November 04 2019, @09:44PM (2 children)
When has it ever been different? The silver market was manipulated (pumped up wildly) by a Texas millionaire back in the 70s, thousands, perhaps millions of small investors lost money when the Federal government dumped silver from Ft. Knox onto the market to bring the price back down.
Stocks? they can't create rules fast enough to attempt to curtail insider trading and similar manipulations. Options and other thinly traded instruments? The whole game there is reading the other players in the market to guess how they're going to make it jump - usually other players you do not know and have little to no information about.
Україна досі не є частиною Росії Слава Україні🌻 https://www.pravda.com.ua/eng/news/2023/06/24/7408365/
(Score: 0) by Anonymous Coward on Monday November 04 2019, @11:09PM
The plunge protection team is at work doing the same thing with stocks.
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @06:46AM
Come now, AC, we really need to memorialize their names,
Nelson, William Herbert, and Lamar, Republicans all. And what happened? How many of these funching Texan Republicans were jailed? Just like th Cock Bros. (Minus one now, so sad!) But now just think, all the Feds have to do, is release mass amounts of bitcoin from Ft. Knox, or the Cheyenne Mountain Complex, or wherever they keep the actual BitCoins. Problem solved!
(Score: 2, Insightful) by fustakrakich on Monday November 04 2019, @09:23PM
Sounds like derivatives to me
La politica e i criminali sono la stessa cosa..
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @12:25AM
The Bitcoin bubble was driven by fomo starting with the idea that somebody was willing to bet actual money that it was worth it's crazy, very forward looking, high price.
If the allegations are correct, somebody was able to setup this situation without risking actual cash. They supposedly did this by trading Bitcoin with un-tethered tether.
Should be a good show.
(Score: 1, Funny) by Anonymous Coward on Monday November 04 2019, @09:28PM (1 child)
Ambitious whale Moby Dick
Set on the course to get rich quick.
He mined bitcoin
With his giant loin
And screwed the world markets big.
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @06:02PM
FYI, it doesn't work unless you can rhyme Dick in the last word.
(Score: 0) by Anonymous Coward on Monday November 04 2019, @09:35PM
nuke the gay whales
(Score: 2) by Freeman on Monday November 04 2019, @11:38PM (1 child)
Here's what wikipedia has to say. It's pretty helpful to understand the idea. https://en.wikipedia.org/wiki/High_roller [wikipedia.org] Whale is a bit more of a derogatory term, whereas someone might not mind being called a High Roller.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @01:52AM
It is whale because of the "there is always a bigger fish" analogy. So one big fish thinks they are in control of the market until a bigger one comes along and bankrupts them via short squeeze, etc.
The idea there is something scandalous about this is ridiculous. It is normal and expected.
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @01:59AM
Epstein. Because he didn't kill himself.
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @07:52AM (2 children)
Critics Savage Research Paper Alleging Lone Whale Caused Bitcoin’s 2017 Rally
https://news.bitcoin.com/critics-savage-research-paper-alleging-lone-whale-caused-bitcoins-2017-rally/ [bitcoin.com]
No, a lone whale didn’t cause Bitcoin’s 2017 rise
https://decrypt.co/11045/no-a-lone-whale-didnt-cause-bitcoins-2017-rise [decrypt.co]
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @06:05PM
In other words:
(Score: 0) by Anonymous Coward on Tuesday November 05 2019, @07:34PM
This person's opinion is not reliable by their own admission.