According to a new paper by University of Texas finance professor John Griffin, and graduate student Amin Shams, Bitcoin’s price may have been artificially inflated in its run-up last December to nearly $20,000 per coin.
It was just seven months ago that some of the internet’s most insufferable assholes told anyone that would listen about the newest force in the global currency market. It was a coin, made of digital 1’s and 0’s, that would disrupt the very idea of currency, a project so revolutionary that we’d all be rich, if only we had the resolve to “HODL.”
And some did. During Bitcoin’s most recent boom, millionaires were made — a handful of billionaires too.
Others bought at the peak of the hype cycle, mortgaging homes and other assets to get in early and ride the rocket to its next station, which was the “moon,” according to cryptocurrency types.
Instead, they saw the asset falter. First losing half of its value in January, before a brief rally breathed new hope into the market, only to painfully extract it in the following weeks.
Now, Bitcoin’s value sits at just $6,500, a nearly 70 percent decrease in value over that span. If this were a stock, this is the point at which shareholders might begin to consider liquidating assets.
But in cryptocurrency, nothing is what it seems.
According to Professor Griffin — who has a history of spotting fraud in financial markets — we were all victims in what could be a massive price manipulation scam.
Griffin looked at the flow of digital tokens entering and leaving one of the largest cryptocurrency exchanges, Bitfinex, and identified several patterns that would suggest someone, or a group of people, had successfully propped up prices when they’d flattened at other exchanges.
To push up the price when it sagged elsewhere, someone or some people, at Bitfinex purchased Bitcoin using a secondary currency known as Tether. Tether was created, and sold, by the owners of Bitfinex. Tether’s creators claim the currency is backed by the US dollar, providing a hedge against volatility in cryptocurrency markets. Simply put, it allowed investors to offload Bitcoin (or other cryptocurrencies) into Tether during wild price swings as a means to avoid substantial losses.
Professor Griffin and Mr. Shams examined the flow of Tether and determined that roughly half of Bitcoin’s price in 2017 could be traced to the hours immediately following its movement into other exchanges — typically during periods where cryptocurrencies were in decline. Coin prices at marketplaces that used Tether exceeded those of exchanges that did not, according to the researchers. The pattern ended earlier this year when Bitfinex stopped issuing new Tether.
Bitfinex executives have denied the exchange was involved in any manipulation. The company, told the New York Times today that it never engaged in “any sort” of market or price manipulation and that “Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.”
Regulators don’t seem to be as sure. Late last year, the US Commodity Futures Trading Commission subpoenaed Bitfinex, and Tether — both of which share a CEO — for a closer look.
Things got worse for the company from there, as it cut ties with a third-party auditor, Friedman LLP., over its failures in auditing the supply of Tether in a “reasonable timeframe.”
Friedman, however, was never hired to look at the reliability of Tether’s records, just to prove that the stated amount existed — the equivalent of writing random numbers in an accounting ledger, and then hiring a firm to prove that there are numbers in an accounting ledger. The scope of Friedman’s audit was limited, and remains unfinished.
According to the New York Times, two others have come forward to back Griffin’s research. University College London professor Sarah Meiklejohn said the analysis “seems sound” and chief economist at blockchain data analysis company Chainalysis, Phillip Gradwell, said the study “seems credible.”
What this means for Bitfinex, Tether, or cryptocurrency markets as a whole remains to be seen.
Claims That Former TRON CTO Was Sacked For Bribery & Theft Surface
Earlier this month, the Chief Techincal Officer of TRON, Lucien Chen announced his departure from the project. He had been with TRON since 2017 and laid out a three-point explanation as to why TRON just isn’t TRON anymore.
Following the announcement by Chen, the TRON PR sprung into action and according to the representatives from the project, Chen was actually sacked from his position months ago because:
“Suspicion of misappropriation of funds, bribery, competitive infringement, and theft of trade secrets and intellectual property.”
The CEO and founder of TRON, Justin Sun lent validation to this claim by retweeting it and a Reddit thread came up which relayed this information to the community.
A reported response from @Tronfoundation on the dismissal of CTO Lucien Chen, J. Zhu & X. Xie in Jan 2019 due to suspicion of misappropriation of funds, bribery, competitive infringement, & theft of trade secrets & intellectual property#TRON Reddit link:https://t.co/LeotF31NsS pic.twitter.com/RYMsn2J9rw
— Misha Lederman (@mishalederman) May 11, 2019
Giving his reasons for leaving, Chen said:
“The whole project has developed into a monetary tool without any “decentralize the web” spirit… The technology platform of TRON was built by me. I certainly know that the real Internet applications cannot function in TRON network at all currently. The TRON ecosystem is still far from commercial applications that users can really apply to.”
There are now claims that the former CTO was bribing people, misappropriately using funds, theft and so on. A post on Reddit claims:
“Chen, Zhu, and Xie were dismissed in January, 2019 for violation of corporate policies and the law. Relevant documents and materials have been handed over to the judiciary.”
Living on Bitcoin Just Got Even Easier, AT&T Accept Crypto Payments With Bitpay
Earlier today, US telecom giant AT&T proudly announced that it had become the first major American mobile carrier to accept crypto assets for the payment of bills. Customers will be able to settle their accounts using Bitcoin thanks to a deal with BitPay.
Although such developments are great for those earning in Bitcoin, for most people interested in the number one digital currency, the appeal will likely be limited. They therefore do not quite represent the holy grail’s of crypto adoption many portray them to be.
AT&T to Accept Bitcoin Payments Through BitPay
It’s getting easier than ever to live your life exclusively using digital currency. More and more online merchants are opening up to crypto assets in one way or another.
Many with a vested interest in digital currency were excited recently by the news that several large companies would be accepting Bitcoin payments – albeit in a round about way. Bitcoin users can now kit out their wardrobes at Nordstrom, shop for gaming supplies at GameStop, and even pay directly for their groceries at Whole Foods using their favourite digital currency.
This latter point got people particularly excited given that internet retail behemoth Amazon owns WholeFoods. Speculation is rife that Amazon itself could be next to accept Bitcoin via this convoluted method of using a payment processor to pay with a peer-to-peer currency.
You see, part of the recent wave of increased acceptance has been made possible by a deal between crypto exchange Gemini and a payments start-up called Flexa. Users actually pay using an application called Spedn. The merchants themselves don’t receive Bitcoin but they for very little investment they can look supportive of uber-trendy things like cryptocurrency.
The latest company to join the pseudo acceptance bandwagon is US mobile giant AT&T. It announcedvia a blog post earlier today that it would be using crypto payments processing company BitPay to receive payments from its customers online.
In the AT&T press release, Kevin McDorman, the vice president of the company’s business operations, stated of the move:
“We’re always looking for ways to improve and expand our services… We have customers who use cryptocurrency, and we are happy we can offer them a way to pay their bills with the method they prefer.”
Sure, It’s Great for Crypto USERS, Not so Much for Speculators
Just like the other recent announcements of so-called merchant acceptance, this is not really the bullish news that many have made it out to be. Since AT&T will be using BitPay to process payments, they will simply receive dollars as they always would have done. To get those dollars, the Bitcoin is immediately sold creating additional downside pressure on the price of Bitcoin. For those purely speculating, it should be realised that by using such services you are increasing the likelihood of dropping the price of Bitcoin. It will be truly exciting when a major retailers takes payment directly in Bitcoin themselves and goes on to finance the business itself using the crypto asset.
Of course, these stories of increased acceptance are great for those who get paid in Bitcoin and don’t want to have to deal with an exchange just to go about their daily routines. Having more options than ever to spend crypto directly at is certainly advantageous for those trying to live without fiat.
Bitcoin [BTC] Going Above $7,950 will Start Another Breakout – Analyst
Bitcoin has been in a slight pullback for a few days now and those who have been watching the charts during this time may be confused as to the direction Bitcoin, and indeed the whole market is going next. A cryptocurrency trader known as DonAlt on Twitter has given some light on the market. He said the lead currency will see some light if it manages to rise to $7,950 from the current $7,842 price.
When will this happen?
Bitcoin grew really fast especially in May, rising way above $8,000 and the crypto community expected a move towards $10,000. However, the market started pulling back in what seemed to be a crash, but analysts said was normal. At the time, the cryptocurrency was said to be growing too fast and needed to correct again before rising at a slower pace.
This seems to agree with DonAlt’s position as the cryptocurrency has eventually corrected but its growth has become significantly slower than before. Another analyst Josh Rager says the asset will be consolidating this week and great volatility should be expected on Friday, May 31st. This may eventually lead to a climb to DonAlt’s critical $7,950 price and the long-awaited recovery above $8,000 again.
$BTC – Price movement
Expect consolidation to happen through this week
Major volatility likely by Fri May 31st with the CME BTC futures expiration
This is also the apex of the meme triangle apex (condensing price)
Support/Resistance areas labeled pic.twitter.com/S5SFBV6uXk
— Josh Rager 📈 (@Josh_Rager) May 23, 2019
A long-awaited rise
The initial price rise evidently raised the expectations of the crypto community and many Bitcoin holders cannot wait for the price to go up again. Not only that, altcoins were expected to rise with Bitcoin’s pullback but the current one has held down even the alts. The rise of Bitcoin is currently probably the only hope for the market and the entire space is looking forward to it.