The Market has been taking a huge hit and has been on a rocky road since the start of this month. One of reasons to why the market is doing so bad is because of a cryptocurrency called Tether. Allegations saying that the people behind it are using tether to prop up the bitcoin market.
Tether is a cryptocurrency that people claim is pegged to the U.S. dollar. It's much more stable than most digital coins that have large price swings.
It was invented in 2015 and theoretically a person would pay $1 for one tether coin.
There is currently 2.2 million tether coins in circulation, according to the Coinmarketcap.com.
The coins are issued by a company called Tether Limited that is governed by the laws of the British Virgin Islands, according to the legal part of it's website.
Jan Ludovicus van der Velde is the CEO of a exchanged called Bitfinex, which has been accused of being involved in the price manipulation of bitcoin, as well as tether.
Firstly many have raised concerns the tether is being issued by the people who own the Bitfinex exchange. Fears have been raised that Tether Limited doesn't actually hold enough U.S. dollars to back all the digital coins in circulation. These rumors have been circulating for a few months.
Tether has also been releasing more coins onto the market in January, Tether has released 850 million new digital tokens. The company has been increasing the number of coins in circulation over the past few months, and this has coincided with the record highs seen in cryptocurrency prices, causing some people to infer there is a price manipulation going on.
"Over the past couple of months, a huge amount of tether has been created, it has shifted to the Bitfinex exchange and presumably buys bitcoin and other cryptos. This, I believe, has been keeping the price up," Nicholas Weaver, a senior researcher at the international Computer Science Institute at Berkeley, California, told CNBC by phone Thursday.
To back up the claims, an anonymous statistical analysis posted online last week looked at the relationship between bitcoin's price and tether. Tether is created when bitcoin is falling
"Tether printing moves the market appreciably; 48.8% of bitcoin's price rise in the period studied occurred in the two-hour periods following the arrival of 91 different tether grants to the Bitfinex wallet," analysis say.
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