A Forensic study conducted on bitcoin in the year 2017 showed that the credit for almost the entire rise of this digital currency at the time can be attributed to a single yet significant player; however, this manipulator of the market remains unidentified. The professors of finance Amin Shams and John Griffin, who are instructors at the State University of Ohio and the University of Texas, respectively, conducted an analysis of more than 200 GB of data to fetch the transaction history between the tether and bitcoin.
Tether is also popularly known as ‘stablecoin’ that has its business value connected to the value of the dollar. According to the study reports disclosed by Professor John and Amin, the trading between bitcoin and tether display a particular pattern.
Both Shams and Griffin wrote that they had come across a pattern that cannot be identified along with the flows and nearly the entire impact of the price on the rise of bitcoin can be credited to the one and only player. They further wrote that they had mapped the data across both the blockchains, i.e. tether and bitcoin and found that one particular entity, who is allegedly being labeled as 1LSg through the documented paper is held responsible for the majority of the patterns obtained.
When Shams and Griffin further tried to track down the source of the data they came to the conclusion that one large account under the banner of Bitfinex was held responsible for the significant changes in the value of bitcoin. Bitfinex is one of the largest digital currency exchanges in the world. The study suggested that, via Bitfinex, the single-player manipulated the demand for bitcoin through the extreme tether flows. The story about it was first updated about it by the sources familiar with the matter on Monday.
The manipulation started to commence as bitcoin began rising to the highest point, which was about $20,000 in the latter half of 2017, suggested the study. On Monday, bitcoin was traded at the value of $9,300.
However, one of the biggest concerns of the SEC is that cryptocurrency is subjected to manipulations. Jaret Seiberg, who is a Cowen analyst, wrote a note on Monday saying that the whole purpose of disclosing the study was to lend credibility to the argument of cryptocurrency being open to all sorts of manipulations.