There are new, potentially troubling, questions about tether (USDT), a cryptocurrency pegged to the value of the dollar, Bloomberg reports.
Very large tether trades at San Francisco-based exchange Kraken are having roughly the same effect on prices as small ones, the news outlet reports. Theoretically, big buy orders should boost the coin’s price temporarily until new tether issuance can bring its value back to $1, but that hasn’t been happening.
There’s another twist. Oddly specific order sizes, many of which go out to five decimal places, have been appearing, and some of them repeat frequently. That could be a sign of “wash trading,” in which participants trade with themselves in order to make market demand look stronger than it is.
Andrew Rennhack, a former professional poker player, started raising questions about the trading activity, spurring Bloomberg to conduct its own analysis. The news outlet collected data on more than 56,000 trades and shared it with a New York University professor who is an expert in market manipulation and a former Federal Reserve bank examiner.
Tether is no stranger to controversy. Observers have questioned whether its backers really hold one dollar in reserve for each tether coin issued. And a Texas professor recently published research saying tether issuance was linked to suspicious purchases of bitcoin (BTC) last year. Read more here.