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.”

Top Cryptocurrency Coin Mixer Seized; Grayscale Investments 'Big News' Today; More Records for CME's Bitcoin Futures

Major crypto headlines from the past 24 hours: European authorities enforce a world-first seizure of a leading cryptocurrency coin mixer; New York-headquartered Grayscale Investment set to drop "big news" today; and the all-time highs continue for CME Group's bitcoin futures contracts.

The cryptocurrency market has endured some significant selling over the past day. At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,588.2 and $234.5; a 4.3% and 8.6% decline over the past 24 hours, respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 3,594.3 (-2.2%).

‘First Law Enforcement Action of its Kind’ Sees Top Crypto Coin Mixer Shutdown

The Dutch Financial Criminal Investigative Service (FIOD) – with the assistance of Europol and Luxembourg authorities – announced the seizure and closure of one of the three largest cryptocurrency mixer services in the world, Bestmixer.io.

This marked the “first law enforcement action of its kind against” a cryptocurrency mixer service, according to a press release from Europol. “A cryptocurrency tumbler or cryptocurrency mixing service is a service offered to mix potentially identifiable or ‘tainted’ cryptocurrency funds with others, so as to obscure the trail back to the fund’s original source,” the statement explained.

Despite the apparent victory for law enforcement, “authorities will come to regret the chain reaction that they are starting here,” according to Cornell associate professor of computer science, Emin Gün Sirer. Explaining his rational, Sirer tweeted “this kind of shutdown creates selective pressure for tumblers that cannot be shutdown. And we know, from the research world, that it’s possible to build much better ones.”

CEO of Cryptoasset Investment Giant Teases ‘Big News’ Today

Grayscale Investments – one of the world’s leading cryptoasset management firms – will be dropping some “big news” at 13:00 (UTC), its founder and chief executive Barry Silbert teased on Twitter.

Grayscale - a Digital Currency Group subsidiary - has been noticeably active on the publicity front in recent times. On May 1, it launched the largest mass media campaign the industry has ever seen and, in the time since, Silbert has been doing the rounds on the media circuit, appearing for interviews on the likes of Bloomberg, FOX Business, and Yahoo Finance.

Records Continue for CME Group’s Bitcoin Futures

CME Group – a world-leading derivatives marketplaces that also offers bitcoin futures contracts – revealed “May is shaping up to be the strongest month ever for CME Bitcoin Futures” in a client email sent on Tuesday.

According to the Chicago-based CME Group, they facilitated the trading of a staggering 33,677 bitcoin futures contracts on May 13; a new daily record. In U.S. dollar terms, this roughly equates to $1.3 billion. The firm also told clients the number of accounts trading its bitcoin futures contracts has risen to over 2,500 – also a new record high.