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Elaine Ou

One Tether Trader Didn't Cause the Bitcoin Bubble

The idea that a lone whale fueled a yearlong Bitcoin bull run is a little silly.

Are the bitcoins in here?

Are the bitcoins in here?

Photographer: Bloomberg

It’s tough being a cryptocurrency exchange. All you want to do is provide a valuable liquidity service to an emerging industry, while navigating a­ ­fine line between regulatory compliance and crypto anarchy. But maybe you step a little too far into the shady side and find yourself in trouble.

That could be the situation an exchange called Bitfinex finds itself in. Bitfinex issues the digital token Tether, a tradable asset on most major exchanges that has remained operational in spite of constant criticism and a New York attorney general investigation. More recently, a study from the University of Texas raises new allegations that a single account used Tethers to drive more than half of Bitcoin’s 2017 price surge. There’s a lot at stake — the research study is cited as key evidence in a $1.4 trillion class action lawsuit against Bitfinex and Tether.