Bitcoin's meteoric price rise may have been down to price manipulation using another virtual currency, researchers have suggested.
Bitcoin's massive price run-up late past year may have been the result of a price manipulation campaign, according to a new study released on Wednesday.
The researchers found that tether issuances rose a year ago during periods when the price of bitcoin was dropping.
The periods with the largest flow of tether accounted for 87 hours, or less than 1 percent, of the data, but were associated with 50 percent of bitcoin's compounded return, and 64 percent of the returns on six other large cryptocurrencies.
Tether has always been accused of being insolvent, as they have been unable to provide legitimate audits, breaking off their relationship with their auditor earlier this year.
As evidence for this claim, the Griffin and Shams note that there tends to be negative end-of-month pressure on the bitcoin price in months when a large number of tethers have been issued but not in others.
Regulators worldwide are increasing their scrutiny of cryptocurrency markets.
"Tether is "pushed" through a supply-driven scheme to make up a currency, convert it into Bitcoin, and then manipulate the price of Bitcoin and other cryptocurrencies.".
While there is little public information on about how Tether was created, it generally exchanges for around $1 as each coin is supposed to be backed by $1 of fiat money in a bank.
Questions about Tether and Bitfinex have dogged the cryptocurrency world since a year ago, when Bitfinex lost banking relationships yet continued to operate, Bloomberg reported.
The Commodity Futures Trading Commission subpoenaed both Bitfinex and Tether in December, over concerns about if Tether is actually by the reserve of USA dollars it claims it has. A follow-up investigation from Bloomberg found that Bitfinex and Tether are likely banking with Noble, but neither company has confirmed it publicly.