Ethereum Co-Founder Joseph Lubin Questions Tether Price Manipulation Allegations

  • Ethereum co-founder Joseph Lubin has questioned whether Tether was really used to manipulate bitcoin's price or not.
  • Per the entrepreneur, the stablecoin is backed 1:1, based on analysis that involved questioning people in the space.

Ethereum co-founder and ConsenSys CEO Joseph Lubin has recently revealed he questions whether Tether’s USDT has been used to manipulate bitcoin’s price last year, when it reached an all-time high near $20,000.

Speaking on Yahoo Finance’s Final Round, Lubin stated he sees Tether as an interesting project, but isn’t completely certain the stablecoin, supposedly pegged to the US dollar 1:1, has been used to manipulate the market.

He said:

Based on our analysis, which involves just talking to a bunch of people in the space, we do believe that tethers are backed 1 to 1 by U.S. dollars in bank accounts… With respect to market manipulations, I’m not sure that market manipulations are related to Tether directly, if they do exist.

Joseph Lubin

Despite its point of view, the CEO noted investors should be wary of the stablecoin, as he expects “many other price stable tokens” to arise and take its place as the number one stablecoin.

Tether USDT is a controversial subject in the cryptocurrency ecosystem. Various critics believe the cryptocurrency is used to pump the market, drawing parallels between the issuance of new USDT and bitcoin’s price rise. Some claim Tether itself doesn’t have $2.7 billion in the bank to back all USDT in existence, and creates them out of thin air.

Tether claims all of its coins are backed by USD held in bank accounts, although it refuses to identify the banks. As CryptoGlobe covered, a study conducted by University of Texas professor John Griffin has suggested tethers have been used to manipulate bitcoin’s price last year.

In fact, an analysis published by Bloomberg looking into Kraken’s USDT trading data found several suspicious features. Last year, the US Commodity Futures Trading Commission (CFTC) subpoenaed both Tether and Bitfinex, a leading cryptocurrency exchange that has the same CEO Tether has.

Back in May, the US Department of Justice (DOJ), working with the CFTC, launched a criminal probe looking into potential bitcoin price manipulation. The investigation was reportedly looking to target illegal activities in the market, like wash trading and spoofing.

 In an attempt to put an end to manipulation allegations Tether hired former FBI director Louis Freeh to look into its financial situation. Freeh’s firm, Sporkin & Sullivan LLP, found the company had enough USD to back all tethers in circulation, plus a $7 million cushion. It noted, however, it wasn’t an official audit.

Lubin, commenting on the future of the cryptocurrency market after the correction that saw most crypto-assets drop from their all-time highs, revealed he believes “there’ll be a series of irrational exuberant price spikes up, followed by corrections.” Each of these spikes, he said, will bring “a wave of new activity and bring fundamental infrastructure to the ecosystem.”

The CEO of ConsenSys, a firm developing decentralized applications (dApps) built on blockchain technology, has argued “trader types” are behind crypto price swings. While prices go up and down, he implied, developers keep building more “fundamental infrastructure.”

Kraken OTC Head Says It’s Too Early to Call Bitcoin a 'Safe Haven' Asset

Michael LaVere
  • Kraken head of OTC trading Nelson Minier says it's too early to call bitcoin a "safe haven" asset.
  • Compares the current atmosphere of crypto trading to how Wall Street used to be. 

Nelson Minier, head of over-the-counter (OTC) trading at crypto exchange Kraken, says that it is too early to call bitcoin a “safe haven” asset, despite the cryptocurrency gaining popularity in that regard. 

Too Early for Save Haven Status

In an interview with Nasdaq TradeTalks, Minier compared the current state of bitcoin and crypto-assets trading to how Wall Street used to operate in the past. 

According to Minier, 

Wall Street ain't what it used to be. The first 15 years I was on Wall Street, it was fun. I was very fortunate. I started in the CDS market which feels a lot like crypto. Here you have a lot of financial innovation, a lot of trading. It feels very much like that...there's a lot of energy and enthusiasm about this progress and where it's going.

Bitcoin has been gaining popularity as a so-called “safe haven” asset. According to the growing belief among analysts and investors, BTC is an attractive alternative to fiat and the traditional stock markets as a hedge against economic downturn. 

However, Minier believes it’s too early to label bitcoin as a safe haven, given the high price volatility. 

He continued, 

So, I’m not so sure that it’s a safe haven asset yet, but I do think that it’s starting to act like one. I think that people are starting to portfolio manage, are starting to come in slowly. And when the market is getting shaky you saw Bitcoin rise, I mean, you wouldn’t see that before, it was trading like a risky asset.

Despite calling bitcoin's safe haven status premature, Minier admitted that “we're heading that way for sure.”