Bitcoin Is Being Manipulated, Says New Study from University of Texas

An academic paper has reached the conclusion that Bitcoin has been subject to price manipulation over the past year, according to the New York Times.

The paper, entitled “Is Bitcoin Really Un-Tethered?”, was written by John M. Griffin and Amin Shams. The former is a professor of finance at the University of Texas, and the latter is a Ph.D. candidate at the same institution.

The 66-page long document examines a hypothesis that cryptocurrency prices are being manipulated with the dollar-backed token Tether. It concludes that Tether is purchased in large amounts during market downturns, and Bitcoin price increases often follow.

In fact, it says that periods of heightened Tether activity are “associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.”


Tether is a cryptocurrency that claims to be directly pegged to the value of the US dollar. Its reluctance to submit to an audit and limiting of redemption rights has led many to disbelieve this claim, especially since by there were more than $2 billion worth of Tether tokens in circulation. At the moment, it is listed as having a market cap of $2.5 billion.

The study focuses on a cryptocurrency exchange called Bitfinex. Hailing from Hong Kong, Bitfinex is one of the biggest cryptocurrency exchanges in the world, handling $7.6 million in trading volumes in the last 24 hours according to In February its close relationship with Tether – Paradise Papers leaks revealed that Tether was created in the British Virgin Islands by two Bitfinex officials in 2014.

Quartz reported in December 2017 that it is mainly through Bitfinex that Tether dollars make their way into the world. Additional allegations have popped up regarding Bitfinex, including an alleged link to – two fraudulent companies had deposited money linked to drug trafficking in a Polish bank account apparently belonging to Bitfinex. The exchange denied the allegations.

In December 2017 Sarit Markovich, a professor at a different US university writing in Fortune, first noted by that the price of Bitcoin jumps when USDT enters Bitfinex.

The study

Griffin and Shams studied Bitcoin and Tether movements between March 2017 and March 2018 and noted that Bitcoin returns are “highly correlated” with Tether creation – furthermore “no abnormal returns are observed in months when Tether is not issued.”

It says that there is some legitimate demand for Tether, but these movements do not seem to dominate: “Our results are consistent with Tether being pushed out onto the market and not primarily driven by investors’ demand.”

It concludes by suggesting that external market surveillance “may be necessary to obtain a market that is truly free.”

According to the New York Times, a professor at the University College London professor Sarah Meiklejohn said that the study “seems sound” and Chainalysis chief economist Philip Gradwell said that it “seems credible,” adding that further study is needed.

This could conflict somewhat with a study published in by a London-based economist. Gina C. Pieters argued in her paper that Bitcoin movements can be used to reveal government manipulation of fiat exchange rates. Her paper is premised on the fact that Bitcoin, as an uncontrolled currency, illustrates natural market movement, so unnaturally-controlled currencies can be spotted by way of their deviation from this.

Controlled by the Chinese? 

As a further note regarding Bitcoin control, Brad Garlinghouse, CEO of Ripple, told the crowd at the 2018 Stifel Cross Sector Insight Conference that “Bitcoin is really controlled by China,” adding that as few as four individuals have power over 50 percent of the market.

He said that he doesn’t think that any major economy would allow Bitcoin to become the primary currency, inferring that this is partly because of this domination. Said Garlinghouse: “How many countries want to use a Chinese-controlled currency?”

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