Their findings, which analyzed a stablecoin called Tether, built on the results of a paper released last year and comes as the U.S. government is increasingly probing crypto firms. Bitfinex and Tether are closely linked, each being owned by the same group of individuals and headquartered in Hong Kong.
The latest research suggested Tether coins were being created without adequate reserves, regardless of demand from investors. The paper said “additional supply of Tether can create an inflation in price of Bitcoin that is not from a genuine capital flow.”
In a statement issued yesterday via a PR firm, officials from Tether said claiming a single entity could be responsible for manipulation was a “clumsy assertion.”
It argued: “The purported conclusions reached by the authors are built on a house of cards that suffers from the absence of a complete dataset.” The research looked at transactions of Tether and Bitcoin on their respective blockchains between March 2017 and March 2018.
“The authors do not possess or reference any data disputing that Tether has sufficient reserves to back up Tether token issuances in circulation,” officials added in its response, before lashing out at “false bravado” and “aggressive statements to the media” allegedly made by Griffin.
The crypto firm said: “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.”
It said claiming Tether was used to enable illicit activity was “reckless” and “utterly false.”
Speaking to Newsweek on Monday, Griffin stood by the team’s results and spoke out against an earlier statement from Bitfinex which criticized the new research before its release.
“The original paper claimed, and this paper shows even more evidence, that there was at times insufficient backing for Tether,” Griffin said, adding: “Their story keeps changing. One can read the detailed evidence and see the truth. A common theme throughout history of all fraudsters is that they attack their accusers instead of admitting the fraud. I’m used to it by now.”
In April this year, New York Attorney General Letitia James announced that Bitfinex and Tether were being investigated for fraud. It was alleged that the executives “engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds.”