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Simple anonymous market manipulator pushed bitcoin to $ 20,000



A forensic study of the bitcoin & # 39; s boom 2017 found that almost all of the digital currency growth at that time can be attributed to "a major player," though the market manipulator remains unidentified.

Finance professors John Griffin and Amin Shams – instructors at the University of Texas and Ohio State University, respectively – analyzed over 200 gigabytes of data for the transaction history between bitcoin and tether, another digital currency. Tether is an asset known as a "stablecoin", which has its trading value linked to the dollar.

The professors investigated that tethers traded for bitcoins revealed a pattern.

"We find that the patterns identified are not present on other streams, and almost all of the price impact can be attributed to this one major player," Griffin and Shams wrote. "We map this data across both blockchains and find that one player or device (labeled as 1

LSg throughout the paper) is behind the majority of the patterns we document."

Griffin and Shams managed to follow the clusters of data to a source: "A Big Account at Bitfinex." The digital currency exchange Bitfinex is one of the largest in the world. The study found that through Bitfinex, the single player could manipulate the demand for bitcoin via "extreme" flows of tethers. The Wall Street Journal first reported on the updated study's results Monday.

The manipulation happened when bitcoin rose to a high of nearly $ 20,000 at the end of 2017, the study found. Bitcoin traded for around $ 9,300 Monday.

"One of the SEC's biggest concerns is that crypto is being manipulated. This study seems to lend credibility to that argument," Cowen analyst Jaret Seiberg said in a statement Monday. [19659002] The study comes after an analysis published in March found that 95% bitcoin spot trading is counterfeit. The study, created by cryptocurrency asset manager Bitwise for the SEC, found that only $ 273 million of about $ 6 billion in average daily bitcoin volume was legitimate.

Cowen said that Griffin and Shams' study is likely to provide even more scrutiny of bitcoin and cryptocurrency in general, especially from regulators and lawmakers.

"We see this as further increasing Washington's crypto and believe it is negative for efforts to launch crypto-ETFs and for Facebook to launch Libra," Seiberg added.

Libra is Facebook's cryptocurrency project, which has seen several major supporters drop out over the last month.

Although the latest study does not identify the manipulator, the professors suggest that those who ran Bitfinex either knew about the operation or even helped with the scheme. Bitfinex's general adviser Stuart Hoegner told WSJ that the study "lacks academic rigor," and said that "it is the global rise of digital currency that has driven the market's demand for tether."

Both Bitfinex and Tether Ltd., the company that controls tether, are owned and operated by the same people. WSJ noted that both companies are under investigation for alleged fraud by the Department of Justice and the New York Attorney General.

– CNBC's Tom Franck contributed to this report.


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