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United States

Tether Under Scrutiny as US Justice Department Probes Bitcoin Price Manipulation

November 23, 2018 by Mark Knowles
The Justice Department’s probe adds to an existing inquiry into possible misconduct, with both Tether Ltd. and Bitfinex receiving subpoenas last year from the US Commodity Futures Trading Commission with the Justice Department and CFTC are coordinating their examinations. Photo: CoolCeaser
The Justice Department’s probe adds to an existing inquiry into possible misconduct, with both Tether Ltd. and Bitfinex receiving subpoenas last year from the US Commodity Futures Trading Commission. Photo: CoolCeaser

In a week of woe for bitcoin, with its price hovering around US$4200, more bad news has surfaced indicating that the US Department of Justice is investigating whether last year’s massive bitcoin rally was due in part to market manipulation.

Federal authorities commenced a broad-ranging criminal probe into cryptocurrencies months ago, but they’ve recently uncovered suspicions that a tangled web involving bitcoin, stablecoin Tether and crypto exchange Bitfinex might have been used to illegally move prices, according to a Bloomberg report.

The Bitfinex exchange is managed by the same team as Tether Ltd. the Hong Kong-based company that created the namesake cryptocurrency. When new coins come to market, they’re mostly released on Bitfinex.

This has lead to allegations from various traders and academic that these Tethers are used to buy bitcoin at crucial moments when the value of the more ubiquitous digital token dips. JL van der Velde, the chief executive officer of Tether Ltd. and Bitfinex, has previously rejected such claims, reports Bloomberg.

The Justice Department’s probe adds to an existing inquiry into possible misconduct, with both Tether Ltd. and Bitfinex receiving subpoenas last year from the US Commodity Futures Trading Commission which is coordinating its examinations Justice Department.

Other federal agencies are also investigating the cryptocurrency sector, with the Securities and Exchange Commission (SEC) announcing last week the first civil penalties in two separate cryptocurrency cases which included fraud and other financial crimes.

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Mark Knowles

Mark Knowles, Coinlaw

With more than a decade of experience as a journalist and editor, Mark has now turned his focus to the blockchain and cryptocurrency revolution that is currently reshaping the global... view profile
Mark Knowles is a member of the Coinlaw team. Read more about our team.

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