Tether Response to Flawed Paper by Griffin and Shams

[Baofeng]

Recently, we have been hearing articles after articles saying that the last bull run we had last 2017 was due to a single person manipulating the price behind. And according to those research an unidentified Bitfinex account was actually using Tether to manipulate BTC by creating demand.

The Real Reason Behind Bitcoin’s Epic Rally Revealed?

And now Tether has responded back:

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. The revised paper is a watered-down and embarrassing walk-back of its predecessor that still suffers from the same methodological defects, coupled with the clumsy assertion that one lone whale may be responsible for the rise of bitcoin 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. As an example of one of many deficiencies, the authors openly admit they do not have accurate data on the crucial timing of transactions or the flow of capital across different exchanges. This critical lack of information means they are unable to establish a valid sequence of events through which the alleged manipulation could have happened. The updated paper is still based on the same incomplete and cherry-picked data that made the original study deficient. Furthermore, the 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.

Despite Griffin’s false bravado in recent aggressive statements to the media, the authors demonstrate a fundamental lack of understanding of the cryptocurrency marketplace and the demand that drives Tether token purchases. Simply stated, the digital token economy is driven by larger and more complex factors than the trading practices of any single player. Judging by the reaction to the updated paper, sophisticated and experienced traders in the ecosystem appear to fully understand this concept. To reduce the spike in the bitcoin price in 2017 to such simplistic terms is facile. It is also an insult to the millions of people in our community that believe in the sound principles governing the digital currency economy.

Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing. All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets. It is reckless – and utterly false – to assert that Tether tokens are issued in order to enable illicit activity. Tether token issuances have quadrupled since December 2017. This growth is not a product of manipulation; it is a result of Tether’s efficiency, acceptance and widescale utility within the cryptocurrency ecosystem.

https://tether.to/tether-response-to-flawed-paper-by-griffin-and-shams/

Well my initial thought is that how can a single entity manipulate bitcoin's price growth? I mean how much money did he really had to use to push the price to almost $20k if that is the case?

[pooya87]

this has always been pure FUD and like any good FUD they are using half-truths to fool people into fearing. the reality is that Tether is shady and has always been like that because they claim to have it backed by dollar 1:1 but have never provided enough satisfying evidence, as the cherry on top it is centralized too!
then we have the bitcoin market itself that has always had lots of traces of manipulation by the whales. we keep seeing it regularly.

so the FUD simply uses these two, exaggerates them a lot, adds some nonsense on top of it and makes it look legit. you have to wonder about the timing of the FUD too. why does it always come when the rise either has stopped or there is a drop?

[lobat999]

Personally I don't believe on the truthfulness of such study and I might agree that Tether has got nothing to do on the alleged manipulation during the 2017 bull run but I will not agree with their statement below:
 

All Tether tokens are fully backed by reserves and are issued pursuant to market demand,

which of course is a lie! (as what @pooya87 had stated) since asserting that Tether was "fully" backed by U.S. dollar in 1:1 ratio and yet they did not provide any credible proofs or haven't opened their books to independent third party auditors to assess the veracity of its claims.

Moreover, most of the community feels that Tether issuances are somewhat discreet and there has been allegations of Tether being "minted out of thin air."

[Yaunfitda]

I mean it's pretty obvious though, a single entity manipulating the price behind? Who would believed such non-sense. And on the part of Tether, they have been exposed as lying blatantly here, they have admitted that they have been running on fractional reserves for years.

Regardless, we could care less, I have said, they have been exposed already, that bubble was fuel by a lot of positive news in 2017 and it couldn't have been attributed to one whale using tether to push the price.

[Bitcoin_bullish]

Tether is a great excuse for no-coiners. They come up with this story from time to time under the false perception that there is no actual demand.
Totally flawed and suspicious as a statement.

In all seriousness, 2017 was the year that everyone was talking about Bitcoin. There was not a single media that didn't cover Bitcoin on it's main page.
What happened was that a lot of merchants and individuals started getting involved. Japan and Korea formally accepted Bitcoin as a mean of payment.

There were same studies about the 2013 bull run that it was just one trader with two bots in MtGox that pushed the price to 1000$.
But they fail to realize that 2013 was the first time Bitcoin got so much publicity and exposure. Hundreds of millions of people discovered Bitcoin that year, including me.

Tether filled a gap that existed in exchanges and is getting rewarded for it with fees. Should we be blaming them for this? If government decides to bring Tether down most of us wouldn't care less. It would probably drive Bitcoin's price up too, as every trader will buy Bitcoin instead of holding USDT.

I think that what we should be researching instead, is who is funding this research. I won't be surprised if I see a major bank behind it.

[kryptqnick]

I think don't believe that one entity could do that. I think it was more of a chain reaction with people buying and buying and buying those coins. Until there've been some sad press-releases about South Korea if I remember correctly, and then it was over just like that. I remember thinking at first that it was temporary, a matter of a week or two. Well, it wasn't. And if it was Bitfinex and Tether Ltd., which have strong ties, as the article suggests, how come they have not done it again? Why not? After all, it was so easy the first time, right? My thought is that it could trigger the bull run in a certain sense, but not be the thing responsible for the whole bull run itself.

[buwaytress]

What else would you expect Tether to say anyway? On a personal level probably best to keep mouths shut, but they probably have to come out with a statement to quell investor fears. Their legal counsel probably wrote all that anyway.

so the FUD simply uses these two, exaggerates them a lot, adds some nonsense on top of it and makes it look legit. you have to wonder about the timing of the FUD too. why does it always come when the rise either has stopped or there is a drop?

Especially when two similar papers are reported on in the same week, yeah, you definitely got to wonder what's up.

Anyone know if this is related to Bitfinexed and Spoofy?

[candy27]

this has always been pure FUD and like any good FUD they are using half-truths to fool people into fearing. the reality is that Tether is shady and has always been like that because they claim to have it backed by dollar 1:1 but have never provided enough satisfying evidence, as the cherry on top it is centralized too!
then we have the bitcoin market itself that has always had lots of traces of manipulation by the whales. we keep seeing it regularly.

so the FUD simply uses these two, exaggerates them a lot, adds some nonsense on top of it and makes it look legit. you have to wonder about the timing of the FUD too. why does it always come when the rise either has stopped or there is a drop?

As long as tether refuses to provide evidence of their reserves, people will continue to ask questions.

I don't get why people trade bitcoin against tether when they can trade it against real dollars on Coinbase, Kraken, Gemini and other exchanges.

If bitfinex doesn't have access to real dollars, they can always allow bitcoin to be traded against another currency (local to where they are domiciled) rather than do this elaborate pretence that tether is tethered to the dollar.

[ChrisPop]

I don't believe in any kind of market manipulation. I might even say that I have removed that word from my vocabulary. In markets there is just supply and demand. If there are more people wanting to buy at a level than people who want to sell at the respective level the price will raise and vice-versa. That's simple finance, nothing complicated. All these allegations with Tether, etc. are just FUD or whatever you want to call that..
Presently, the volume from institutional investors is raising as I write this.. Check out the Bakkt volume if you don't believe me. Respectively the infrastructure for better liquidity and the globalization of BTC is being built by big financial giants.

[electronicash]

John Griffin and Amin Shams will accuse all these stablecoins soon but since they already admit they can't provide information as to how they come up with the findings, they may not find more of it since there are more companies releasing stablecoins these days. if more tetherlike companies will try to beat the ATH, we now know where the market is going.

traders benefit from this tether, if they were really that sketchy the regulators probably had pinned them down already. but there are more of them now. more to accuse i guess.

[Searing]

Of course, Tether would push back and say that.

But for myself, I think the issue with manipulation of Bitcoin by Whales has a few simple reasons.

1) If you are a whale and were big into BTC mining with Bitmain equipment from 2017 to 2019, you are soon to be out of the mining game. Yet if you were big,

you have data halls to pay for and rent and etc as you wind it down. Instead of hodl'ing BTC, you are forced to sell it (Notice how we dump in price from the 1st of the

month till the 10th of the month). Thus mining is down, hodl'ing is down from these folk and they all have to sell more coin than they'd like to pay bils. Real Life Issues.

2) If you are a whale and If you are a Boomer etc, you likely are going to continue to takes 'some' out of your BTC stash. If some of the really big top 5% boys are

in this group, it has a disproportionate effect on market price.

3) FUTURE: If people were collecting BTC with 'excess cash' when the economy is good, they could also blow more BTC when the economy is bad. A lot of BTC folk

and whales 'were' self-employed miners for years with BTC/Crypto. If these guys have a choice of getting a real job again, they will cash out some coin. So the question is:

will BTC get more people hodl'ing in bad times as a store of value in the next recession? Or will people blow BTC/Crypto to keep the lifestyle of whales or the self-employment

going poof from mining etc, and sell coins? I know more than a few folks who are having to sell coin to pay for their data hall operations etc by the 10th of the month.

No idea. But some of the stuff that crosses my mind on HODL'ing hoard or all or some or whatever.

So the dump of tether back in the day was likely the same as above, not manipulated, just some very rich whales who dumped at the ATH and for a while it was whales

accumulating...but it got to a point that more whales dumped than accumulated..thus the drop from the ATH again. Self-Interest is what moves the market IMHO, but

whales had a lot more clout in 2017 than they do now. (hell, I'm probably wrong)

later

brad

[squatter]

Of course, Tether would push back and say that.

Granted, they were obviously going to dispute the study no matter what, but I think they make some strong points:

As an example of one of many deficiencies, the authors openly admit they do not have accurate data on the crucial timing of transactions or the flow of capital across different exchanges. This critical lack of information means they are unable to establish a valid sequence of events through which the alleged manipulation could have happened.

It's rather insulting that the authors would conclude that a single trader caused the 2017 price surge -- they don't have data that even begins proving that theory.

I'm amazed that these professors would publicly discredit themselves like this. They must have been paid an exorbitant amount of money. Their conclusions are obviously intended to be taken purely on their academic authority, not on the merits of their study.

[figmentofmyass]

Tether is a great excuse for no-coiners. They come up with this story from time to time under the false perception that there is no actual demand.
Totally flawed and suspicious as a statement.

yep, it's just a rinse/repeat of the willy bot FUD. "mt gox faked the price, nobody really wanted to buy $1200 bitcoins!"

i hate agreeing with tether because their responses in these situations are always so overly defensive and unprofessional sounding. but there's no doubt this study in particular is a total crock of shit.

this article picks the study apart fairly well:

According to Jeremy Allaire, Co-founder and CEO of Circle, the Tether study makes the mistake of attributing a custodial account address to a single trader (although the authors maintain that this is an individual deposit address). Exchanges pool customer funds into a single wallet before netting and batching transactions with partner institutions; traditional banks do the same. A single Bitfinex wallet could easily represent the aggregate trades of many customers.

The authors also examine the top 1% of hours with the highest Tether issuances, and find that these issuances were typically prec­eded by a falling Bitcoin price. They suggest that Tethers were issued to provide artificial price support. 1 While the issuances do seem auspiciously timed, it may simply be that Tethers are issued in response to user demand. Kraken, another cryptocurrency exchange, has previously noted 2 that Tether issuances positively correlate with their own cash deposits. Every Tether issuance is publicly reported on the blockchain, and traders use bots to algorithmically trade on this information. No surprise that Tether issuance can amplify demand for Bitcoin.

There may be a confounding factor. In late 2017, the Chinese government imposed a ban on cryptocurrency exchanges. According to a report from research firm Chainalysis, traders in China exchanged large volumes of yuan for Bitcoin after learning of the impending ban. Once the ban was in effect, the traders had no way to trade crypto back to yuan, so they shifted to using Tethers on overseas exchanges as a substitute for fiat currency (after all, the yuan is roughly pegged to the dollar). A more recent study found that Tether was used in 99% of Bitcoin spot trades in China this year, accounting for 60% of all on-chain transaction value.

Tether may even have a use case beyond speculation. Chinese importers in Russia reportedly buy tens of millions worth of Tether each day to send remittances back to China. The U.S. has threatened to ban Russia from the Swift international payment network, and Tether offers a sanctions-resistant alternative without the volatility of Bitcoin.

Another study using data from the same period finds that Tether issuance has no statistically significant impact on bitcoin price – the amount of Tether printed at any one time is dwarfed by amount being actively traded – although the data granularity is coarser than the University of Texas study.

[drumamat]

So the dump of tether back in the day was likely the same as above, not manipulated, just some very rich whales who dumped at the ATH and for a while it was whales

accumulating...but it got to a point that more whales dumped than accumulated..thus the drop from the ATH again. Self-Interest is what moves the market IMHO, but

whales had a lot more clout in 2017 than they do now. (hell, I'm probably wrong)

It is, but one thought doesn’t leave me - if the whales dumped bitcoin, then there were those who bought it with pleasure!Isn't that right?Today's price of Bitcoin absolutely depends on those who are interested in buying and holding it. If tomorrow everyone simply refuses to hold and store, then the price will simply become 0!

[pixie85]

I don't like USDt and don't trust it but the paper has no substance.

I've never seen an academic paper in which the authors would admit to not having full data and base it on circumstantial evidence. A paper like that would be criticized by all reviews and its creators ridiculed. Where's the science in attacking a private company with no evidence? I'd like them to reveal how much they earned on this publication and who paid for it/donated.

[Searing]

So the dump of tether back in the day was likely the same as above, not manipulated, just some very rich whales who dumped at the ATH and for a while it was whales

accumulating...but it got to a point that more whales dumped than accumulated..thus the drop from the ATH again. Self-Interest is what moves the market IMHO, but

whales had a lot more clout in 2017 than they do now. (hell, I'm probably wrong)

It is, but one thought doesn’t leave me - if the whales dumped bitcoin, then there were those who bought it with pleasure!Isn't that right?Today's price of Bitcoin absolutely depends on those who are interested in buying and holding it. If tomorrow everyone simply refuses to hold and store, then the price will simply become 0!

I agree...the rinse/wash/repeat....gets amplified when the ATH is approached...and perhaps even the whales jump in the pool on the way up...but with the amount of $$$

a whale has and big money means more probably real-life issues....the whale is also the first to bail with this 'real $$$' realization...especially if he/she (the whale) is much better off on the

run up buy buying more up to the ATH and can sell out at even more $$$ with more or less $$$ intact. The 'normal' not whale bitcoin is likely to just 'let it ride' like a lottery...

thus the ebb and flow we see now.

It seems when BTC gets  over $10k some whales bleed some BTC off...it goes down to 8k other whales or same whales buyback in...rinse/wash/repeat

with as much Bitcoin these whales have the price between 8k and 12k could go on for more than a few years...

as this relates to tether..it is likely (?) a lot easier to dump btc in tether as a whale and see which way the market is going and hodl or dump out or back into BTC using that method.

I'm guessing on that. But again, it could be just too many whales running from the low price side of the boat and back to the high price side of the boat..thus the volatility.

The only way out of this would be if the whales all decide to get out of BTC for cash for some real-life issue maybe? deep recession? etc..then prices would really dump.

or

The other way would be if the whales see the same recession as a reason to HODL coin for bad times..store of value as stock market dumps, etc, thus sitting on their hands...and thus

driving scarcity of BTC up and price of BTC up ..the old share of value argument

So it was not tether..it was whales trying to make up minds when to sell/if to sell or if to buy back on the volatility of bitcoin...likely adding to it greatly..it is not a conspiracy

if you are a large whale and have a lot of influence on the market....all these whales are well aware of how much sway they have in the BTC market....they just IMHO act

accordingly ...but there are a mess of them doing so....self-interest rules...it just is obvious when they should buy and when they should get out with that amount of BTC they

hold..thus they hold the price to where they want by consensus on how they buy and sell...their influence is just way greater than the average user.

When everybody is getting into BTC (newbs) they are more likely to just sit back and watch till the ATH (or their uncomfortable zone) and then they sell and profit and/or whatever.

Again, once BTC is say accepted more readily as a store ..of value...I myself would see NO whales selling for real-life issues..in that the price would likely go up big time...

But even they have to see NO whale games and adoption and such to accumulate on the hype along with everyone else. Until then they can move the market like a mindless

but...whatever a group of them is doing at any particular time, again for real-life issues, sometimes may show where the market is going...

what that point is I have no idea...but hopefully that kinda acceptance and stability is coming to BTC and is reflected in higher/sustainable prices...

but in an unregulated market like BTC (IMHO) with large players and no laws against wash trading and other tricks you'd not otherwise see in a traditional market, the price

will never go sideways..it will either go up or down. Usually with large swings in price. The only thing that BTC does have going for it is that sideways price when it is passed

through back and forth between adoption and whale games keeps getting higher. So again, not tether, just obvious self-interest on the whales part and adoption/newbs growing

pains and acceptance..battling it out as I think is going on (but then again, I'm just typing out of my ass on here so what do I know)

later

Brad


chump or champ we will be the first to know

brad

[pooya87]

this has always been pure FUD and like any good FUD they are using half-truths to fool people into fearing. the reality is that Tether is shady and has always been like that because they claim to have it backed by dollar 1:1 but have never provided enough satisfying evidence, as the cherry on top it is centralized too!
then we have the bitcoin market itself that has always had lots of traces of manipulation by the whales. we keep seeing it regularly.

so the FUD simply uses these two, exaggerates them a lot, adds some nonsense on top of it and makes it look legit. you have to wonder about the timing of the FUD too. why does it always come when the rise either has stopped or there is a drop?

As long as tether refuses to provide evidence of their reserves, people will continue to ask questions.

I don't get why people trade bitcoin against tether when they can trade it against real dollars on Coinbase, Kraken, Gemini and other exchanges.

If bitfinex doesn't have access to real dollars, they can always allow bitcoin to be traded against another currency (local to where they are domiciled) rather than do this elaborate pretence that tether is tethered to the dollar.

of course people are going to ask questions and remain suspicious of anything that is shady such as Bitfinex. but there is a big difference between asking questions, analyzing shadiness and with spreading FUD. this article is the later.

as for why people do it, i think it is mainly about where everyone is doing their most amount of trades. for instance a bitcoin trader will never use tether. they stick to fiat on decent exchanges such as those you named but an altcoin trader that is mainly on an altcoin exchange like Binance that is dealing with tether day to day would also use it for bitcoin trades in the same platform with the same account. it is a matter of convenience for them.

[Ucy]

If the growth was due to manipulations, we should be experiencing an increase/decrease in price that directly proportional to tether issuance. Have the accusers able to provide any solid proof that supports this particular allegation? 
Well, I believe a entity can easily manipulate price but stuff like this has to be proven and not just based on opinions