US Department Of Justice Goes After Bitfinex And Tether (USDT)

According to Bloomberg, the United States Department of Justice has opened an investigation against Bitfinex and its stablecoin, Tether (USDT), for alleged market manipulation during the Bitcoin (BTC) rally that occurred last year, which led BTC to reach $20,000 at the time.

Although charges have not been made against the cryptocurrency exchange, the authorities are investigating the matter further to settle claims for multiple community members and financial experts that have led to the particular conclusion of market manipulation.

The investigation could not come at a worse time, especially with the bear trend the market is experiencing right now and the drop in prices. In less than a week, Bitcoin (BTC) experienced a drop in prices of about 15%, reaching new lots and hanging around the $4,000 – $4,500 mark, a price that had not been seen since last year. The rest of the market has also been affected by this major drop.

Furthermore, Bitfinex has been under investigation since January of this year, when the US Commodity Futures Trading Commission (CFTC) started to review the behavior Tether (USDT) had at the end of 2017. Tether (USDT) has been subject of insolvency claims since October 2018, which is why investigations were opened again. As of today, Tether (USDT) is worth $0,99 recovering from its drop of $0,95 during those tough times.

As for the Department of Justice, it’s basing its investigation on allegations laid out in a paper published by the University of Texas where professors John Griffin and Amin Shams describe a particular pattern seen during the Bitcoin rally, which explains a market price manipulation. Professor Griffin has refused to confirm if he is working with the authorities on the matter.

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As for Bitfinex, its CEO JL van der Velde commented on the matter saying:

Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.

There’s a deep concern within the crypto community in regards to the alarming increase of negative news that could easily damage the market, creating panic sales and scaring away new investors. Although experts have claimed that Tether (USDT) could be just too big to fail, scrutiny could easily kill the remaining trust people have in the stablecoin, causing its premature death. It’s now up to Bitfinex and the Tether community to keep the cryptocurrency up and going in such a volatile market.

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