Market Rigging: As bitcoin nosedives, regulators said to be investigating whether it was propped up illegally
The U.S. Justice Department is investigating whether traders used tether, a controversial cryptocurrency that founders say is backed 1:1 by a U.S. dollar, to prop up bitcoin, according to a report from Bloomberg News, which cited three people familiar with the matter.
Tether and Bitfinex did not immediately respond to CNBC's request for comment.
The Commodity Futures Trading Commission also subpoenaed tether and Bitfinex, who share many of the same executives, in December in part to prove that these tokens are actually backed by a reserve of U.S. dollars. The potential market tricks include "spoofing," or placing fake orders until the price hits a certain level, then pulling those orders.
This might be a good thing for cryptos if this investigation proves market manipulation by an exchange. Tether has long been question if it actually has 1:1 ratio of dollars to bitcoins because no official audit has been done on tether. So it makes sense to me that the owners of tether and bitfinex used all these bitcoin they got from tether and put them on their exchange to manipulate buy and sell order by placing fake orders to push the prices up or down.
Tether Audit: FSS Report States All USDT Is Fully Backed, but Can’t Prove It
The Tether Transparency Update — FSS Report, published on June 20, states that the release of financial data is intended to directly address criticisms of the platform that have surfaced recently, including allegations of Tether-driven Bitcoin price manipulation.
https://cryptoslate.com/tether-audit-fss-report-states-all-usdt-is-fully-backed-but-cant-prove-it/
I don't bitfinex is the only exchange manipulating prices of cryptos. This recent down turn in cryptos is probably being heavily influenced by bitfinex manipulation to the downside and the other exchanges. I'm hoping this will force these exchanges to clean up their act and allow real market orders to set the price of cryptos. If tether is a scam and bitfinex owners committed fraud than they need to be prosecuted and tried for their crimes.
You can help stop the market rigging by taking your cryptos off these exchanges and putting them in your own private wallet where these exchanges can't use them to manipulate the prices.
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HHmmm, trying to think of what would work to fix this spoofing and false pump tactic.
One thing that may help is a promise from a company to close the window we have to cancel orders, is it already a really tight time frame or would that help?
Part of me thinks they have got the right lobbyist in place to guarantee they have a regulations saying the window must be long enough to keep this practice going but I haven't seen the laws myself. @gregorypatrick
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