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The stablecoin Tether (USDT) has been in the news pretty much since Bitcoin(BTC)trade skyrocketed to its all-time high of $20K at the end of 2017. Several controversies and lawsuits have been hovering around Tether, alleging it manipulatively pushed the Bitcoin’s price to astronomical heights.
Several researchers have even published a thorough hypotheses about it. University of Texas’s Professor John Griffin and Ohio State University’s Amin Shams have published a paper that claims Tether was responsible for Bitcoin’s phenomenal rally back in 2017. However, Tether has responded by wholly rejecting the claim and accusing that the paper is foundationally flawed because it is based on an insufficient data set.
Griffin and Shams recently updated the paper first published in 2018 along with the hypothesis that backed their claim. Tether simply denied the claim, calling it a “Flawed Paper” and responded:
“We have now reviewed the updated Tether article by John M. Griffin and Amin Shams.
To obtain publication, Griffin and Shams have released a weakened yet equally flawed version of their prior article.”
Tether, sister to Bitfinex crypto exchange in which the alleged manipulation took place, further said that the revised version of the paper is the same as its predecessor and has nothing new to strengthen the researchers’ claim. According to Tether, the newly published paper still ‘suffers from the same methodological defects, coupled with the clumsy assertion’ that a single big money movement was responsible for the rally Bitcoin witnessed in 2017.
“The purported conclusions reached by the authors are built on a house of cards that suffers from the absence of a complete dataset” Tether said. Out of many faults, Tether described one as the absence of sufficient and accurate data that includes the exact timing of the transactions and or the flow of capital across different cryptocurrency exchanges.
This data seems to be quite necessary to come to the conclusion they have already reached too; however, Tether believes the same incomplete data brought the main deficiency to their academic research.
The paper also alleges that new Tether coins are minted without reserving the equivalent amount of USD, an allegation to which Tether responded as well:
“[T]he authors now admit that the patterns of trading they observed could be consistent with the market purchase of Tethers, as opposed to the issuance of unbacked Tethers. Importantly, the authors do not possess or reference any data disputing that Tether has sufficient reserves to back up Tether token issuances in circulation.”
Lastly, Tether said that the company and its affiliate crypto exchange Bitfinex never minted unbacked Tether and used it for Bitcoin price manipulation. The stablecoin firm surmises that the BTC rise was the result of Tether’s acceptance and its wide range of utilities.