Cryptocurrency Exchange Kraken Lashes Back at Bloomberg over Tether Complaint
KRAKEN, TETHER (USDT)–Popular cryptocurrency exchange Kraken has offered a rebuttal to last week’s scathing article by Bloomberg implicating the trading platform in market manipulation using the controversial stablecoin Tether USDT.
As outlined in a previous article reported on EWN, Bloomberg reviewed 56,000 trades from Kraken’s public ledger between May 1 and June 22 and, in conjunction with NYU Professor Rosa Abrantes-Metz and former Federal Reserve bank examiner Mark Williams, came to the conclusion that Kraken may have been manipulating their marketplace for Tether’s USDT stable cryptocurrency. The pattern was first uncovered by former professional poker player Andrew Rennhack, who was puzzled over the lack of price movement differentiation between small and large Tether orders on the exchange. In effect, massive USDT orders were having little impact on the market price, and having a similar effect as relatively small orders. In addition, the author cites “oddly specific” order sizes that have commonly been associated in the past with attempts at price manipulation.
Kraken Responds to Accusations of Manipulation
In the response, Kraken takes an acerbic stance defending against allegations of market manipulation, implying that the Bloomberg article misunderstood the nature of the cryptomarkets,
“A reporter covering market structure for Bloomberg News inexplicably fails to comprehend basic market concepts such as arbitrage, order books and currency pegs. More troubling, however, was the applause from other “journalist” lemmings as they followed in walking their reputations off a cliff. It defies logic.”
The article also cites support from the Kraken community in reviewing the the Bloomberg article, chiming in that they too found fault in the original publication’s evidence towards manipulation,
The author of this article is seriously lacking in any understanding of how a market works. There might be manipulation in USDT but he has not even hinted at any credible proofs for it. – u/AlpineJoe888
Kraken’s rebuttal hinges on the fact the exchange moves a small volume of Tether relative to the entire marketplace of cryptocurrency, and that the sophistication of arbitrage across exchanges has effectively solidified the pricing of Tether. That, combined with investor expectation that 1 USDT is worth 1 USD keeps the stablecoin’s price stable.
As Kraken argues, the one-sided approach to article writing, particularly by a publication as large as Bloomberg, has potential ramifications for the entire industry of cryptocurrency,
It’s scary to think that our lawmakers are reading this stuff. The title sure was sensational, and it undoubtedly grabbed eyeballs but what of the readers who are not following the outrage on Reddit and Twitter? What of those who rely on the journalistic integrity and expertise of their news sources?
When asked by Cointelegraph for a response to Kraken’s rebuttal, Bloomberg had the following to say,
We stand by our reporting.
Given the high profile nature of Tether, from allegations of over-inflated funds, SEC inquiries, and the recently published review by a former FBI director, the stablecoin USDT is creating a great deal of polarity in the industry of cryptocurrency. Tether represents the 10th largest cryptocurrency by market capitalization, contributing 2.7 billion USD (with a 1:1 value of USDT) to the crypto markets. The aforementioned private review has given the industry of cryptocurrency a modicum of relief over the true nature of Tether’s fiat backing, but investors are still waiting for a public audit to take place to give a definitive answer. In the meantime, giving investors broader access to a stable currency on exchanges in the absence of direct fiat pairing has been a welcomed addition, even if it negates the explicit nature of dealing solely in cryptocurrency.