The U.S. Department of Justice (DOJ) is increasingly focusing a months-long investigation into crypto market manipulation on the tether stablecoin, a report says.
Citing individuals familiar with the probe, Bloomberg reported Tuesday that the DOJ is looking into whether crypto exchange Bitfinex and Tether Ltd. have pushed bitcoin’s price up using the stablecoin. Specific details of the investigation were not shared, and no accusations of wrongdoing have yet been made.
However, concerns about tether have long existed in the public sphere, with researchers at the University of Austin publishing a study this summer linking the stablecoin’s issuance with bitcoin’s 2017 price pumps.
The two found that even a small amount of tether used to buy bitcoin would help prop up the world’s oldest cryptocurrency’s price.
The CFTC has already subpoenaed Bitfinex and Tether, although it is unclear what information the regulator sought in those subpoenas.
A Freedom of Information Act (FOIA) request sent to the regulator by CoinDesk asking for information about the subpoenas was denied due to a number of exemptions, including ones related to law enforcement investigations.
The DOJ first began its criminal investigation this past May alongside the Commodity Futures Trading Commission (CFTC). At the time, the DOJ was reportedly looking into spoofing – the use of large volumes of fake orders to influence market prices – as well as whether traders were faking volume to trick other investors into participating in the market.
Representatives for Bitfinex and Tether, as well as the DOJ and the CFTC, did not immediately respond to a request for comment.
Department of Justice logo via Mark Van Scyoc / Shutterstock