Over 50,000 transactions between cryptocurrency exchange Kraken and Tether have recently been analyzed, trying to pick apart the relationship between the famous Kraken cryptocurrency exchange and the alternative dollar-backed digital coin. The investigation was inspired by suspiciouns that Tether was being used to pump up the price of Bitcoin in recent months.
The analysis that was done revealed what seemed like a suspicious trading of the stable coin Tether on the crypto network. The group narrowed suspicions down to a few transactions which they referred to as akin to defying gravity when it came to the exchanges’ industry. They found it highly unlikely how larger transactions of Tether did not seem to sway prices much.
Data does not make sense
Since investigators had never come across a market that behaved the way Kraken did they became very suspicious of it. The big question is whether the trades that were monitored between May 1 and June 22, were outrightly monitored. A professor at New York University’s Stern School of Business who also doubles as a manipulation expert, Rosa Abrantes-Metz said that he had looked through lots and lots of data and he does not think that it is real.
The analyzed data unearthed a sequence of curious order sizes with some extending more than five decimal places. The most recurring volume of Tether on the exchange were 75 units, 1000 units, and 13,076.389 units. This could be an indication of an installed automated trading program since that is not a number any regular trader would choose.
When the group looked at the data in terms of how different prices affected the volumes, the exchange’s USD/USDT order book went contrary to the basic premises of economics. According to the laws of economics, large transactions and small transactions cannot have the same impact on prices as was evident on data analyzed.
Increased demand for an asset should cause the price of an asset to increase as well. However, the group noted that one transaction of 75 Tether was able to shoot up the price three naughts and a one after a decimal point, which is almost no impact at all. Whereas USDT price should have risen with the increase in more Tether so as to help it settle, that did not happen.
The report stated that the specific transactions might be a signal of wash trading. This is when people trade with themselves thereby making a false market demand. However, this is banned in regulated markets.