фото показано с : blokt.com

Bitcoin started the week on a bad note as prices slumped in the BCH hard fork aftermath. According to a new report in Bloomberg, the problems for the coin could just be getting started. The US Justice Department is reportedly looking into the coin’s 1300% rally last year that sent prices to $20,000 and investigating if the rally was a result of manipulation. Bitcoin dropped 16 percent on Tuesday as the crypto markets continued its bloodbath for the second straight day.

The regulators are looking specifically into Tether, the controversial stablecoin that has been linked with Bitcoin manipulation in the past. Tether is backed 1:1 by a US Dollar and the cryptocurrency exchange Bitfinex is closely linked to the controversy. Federal prosecutors already launched a crypto probe earlier this year.

Now, they are suspecting that the Bitfinex might have been using Tether to manipulate Bitcoin prices illegally. A trick called spoofing could be put in place, which includes the placing of fake orders in the market until the prices hit a certain level. These fake orders are then pulled from the markets.

Interestingly, Tether and Bitfinex share some executives, and both the entities were subpoenaed by the Commodity Futures Trading Commission to prove that a USD reserve indeed backs each Tether.

Other federal agencies are also looking deeply into the cryptocurrency sector. Last week, the Securities and Exchange Commission announced the first civil penalties in two separate cryptocurrency cases which included frauds and other abuses in the industry.

Some academics are also calling out a scam in the Bitcoin industry. According to University of Texas finance professor John Griffin, the Bitfinex-Tether-Bitcoin theory holds true. He and a graduate student Amin Shams published a study in June confirming that at least 50% of the jump in prices could be attributed to price manipulation closely linked to Bitfinex and Tether.  Griffin boasts of a solid track record in identifying financial fraud which makes his finding even more important for the crypto sector.

Tether, interestingly, trades below the price of one USD, even though its price should be strictly pegged to $1. It is trading at 98 cents on Wednesday while Bitcoin has fallen to $4,477.46.

Regulators Investigate Last Year’s Record Highs for Bitcoin, Did Tether Prop up the Market? was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

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