The US Department of Justice and the Commodity Futures Trading Commission are setting up an inquiry on Tether’s role in the price manipulation of Bitcoin during the massive growth of the cryptocurrency last year.
Earlier this year, the department of justice was initiating a criminal probe in the role of traders for price manipulation of Bitcoin in 2017 end when it reached an all-time high of $20000. Now the department is suspicious of the involvement of Tether and Bitfinex Exchange in the same matter. The department believes that the price of bitcoin was forcefully pushed up with the help of Tether Stablecoin.
The department is currently carrying out an investigation to determine whether Bitfinex along with Tether practiced illicit trading activities to increase the price of bitcoin. Earlier the US Commodity and Futures Trading Commission was also investigating the activities of both Bitfinex and Tether and now both the departments will together investigate into both the cryptocurrency companies. The officials have not disclosed yet whether the investigation is only on the companies or on the company executives as well.
Earlier this year, a professor of Texas University examined the involvement of Tether for manipulating the price of bitcoin by using trading algorithms to increase the prices. The research disclosed that Bitfinex Exchange uses Tether Stablecoin to buy bitcoin when the price is low using algorithms.
Tether, however, defended themselves by calling all the statements as false. Tether explained that the there is a limited supply of the USDT tokens and that every USDT is backed by 1$ which is kept by the company in their bank account.
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