Accusations and allegations come and go like wildfire in the world of cryptocurrency, but the suspicion surrounding Tether and its potential involvement in market manipulation is perhaps the most persistent story of 2018.

Now, this isn’t a new story. In fact, there have been no official allegations as yet off the back of the US Department of Justice investigation into Tether, which began in May. However, Bloomberg, today published an article claiming that the inquiry has focused on Tether, Bitcoin and Bitfinex.

Of course, Tether and Bitfinex are under the same ownership, adding fuel to the fire that the exchange may have used Tether to buy Bitcoin at strategic moments to artificially inflate its price. The theory dates back to the end of 2017 when Bitcoin rose spectacularly to a value of almost $20,000, before falling throughout 2018 to a new 12-month low today of $4500.

Tether is so-called as it is pegged to the US dollar, making it a Stablecoin. This stability means that investors are happy to shift Tether across exchanges with no concerns that this activity may be to their detriment. Now, Tether claim that each Tether is backed by 1 US dollar, meaning that the 1.8 billion Tether in circulation is worth $1.8 billion US dollars. This is the main claim that many experts have spent most of 2018 disputing, though.

As most Tethers enter circulation through Bitfinex, the theory is that unbacked Tethers come into circulation and were then used to buy Bitcoin whenever it looked to be entering a state of decline. This ultimately led to its enormous increase in value at the end of the year. While both Tether and Bitfinex have denied that this happened, it did result in a US Commodity Futures Trading Commission (CTFC) subpoena back in June.

This wasn’t the only instance, though. Aside from this CTFC subpoena, Tether has also had to deal with accusations of wash trading on the Kraken exchange. While the US DoJ has yet to make any accusations officially, the resurfacing of these claims in Bloomberg will push a story back into the limelight that Bitcoin champions may have been hoping would simply go away. As the crypto market continues its dramatic slump, it is a reminder to many mainstream institutions of the volatility of cryptocurrencies.

Indeed, a continued drop in value across the board may start to erode positive relationships between the digital and mainstream financial worlds that had been built up by a perceived good performance from the leading cryptocurrencies towards the end of 2017.

The other issue, of course, is that this kind of publicity can only have a negative effect on the price of Bitcoin and the rest of the market. As the overall market capitalization continues to fall, so too does the wider blockchain industry. And an extended slump into 2019 may have long-lasting effects on the industry as a whole, and its efforts to become cemented in the mainstream.

The post Tether Unable to Shake Claims of Market Manipulation appeared first on ZyCrypto.

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