An investigation by federal prosecutors into whether bitcoin’s rise last year was fueled in part by market manipulation has homed in on the crypto exchange Bitfinex and Tether, a company that is run by the same management team as Bitfinex. The probe, reported by Bloomberg, comes after researchers at the University of Texas alleged that Tether, which issues a $1 token said to be backed by reserves of dollars, used its tokens to artificially prop up the price of bitcoin, potentially accounting for about half of bitcoin’s 1,400% gain last year.
The idea that bitcoin’s 2017 rise was largely due to market manipulation could be especially painful for traders this week, as bitcoin falls to its lowest price in over a year. The details about the probe also are surfacing as the SEC ratchets up its enforcement of cryptocurrency-related cases. Still, as the Bloomberg story notes, officials haven’t accused anyone of a crime, and it is unclear whether they are looking into exchange executives or just activity that occurred on exchanges.