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Bitcoin's epic rise last year may have been more than investor fervor. A study published Wednesday says at least half of the jump in bitcoin was due to coordinated price manipulation.
University of Texas finance professor John Griffin, who has a 10-year track record of spotting financial fraud, and graduate student Amin Shams examined millions of transactions on cryptocurrency exchange Bitfinex. In a 66-page paper, the authors found that tether was used to buy bitcoin at key moments when it was declining, which helped "stabilize and manipulate" the cryptocurrency's price.
"Fraud and manipulation often leave footprints in the data and it's nice to have the blockchain to track things," Griffin told CNBC.
By tracking Bitfinex transactions, which are recorded on a public ledger, Griffin found that another cryptocurrency, tether. was used to buy bitcoin after large price falls. The authors tracked that pattern and found periods of suspicious bitcoin price activity tied to the issuance of tether, which is purportedly pegged to the value of the U.S. dollar.
"It was creating price support for bitcoin, and over the period that we examined, had huge price effects," Griffin said. "Our research would indicate that there are sophisticated people harnessing investor interest for their benefit."
Griffin found that about 87 hours, or about 1 percent, of heavy tether trading could explain 50 percent of the rise of bitcoin, and around 64 percent of the rise of other major cryptocurrencies.
Bitcoin rose to almost $20,000 in December after starting last year below $1,000. This year, the world's first and most popular cryptocurrency has lost more than half its value, trading near $6,252 on Wednesday afternoon, according to CoinDesk.
Both Bitfinex and Tether, the company that issues the virtual currency, have been a cause of concern for some in the industry.
"The lack of transparency surrounding Tether raises red flags for me," said Dan Ciotoli, software engineer and blockchain analyst at Bespoke Investment Group. "It's probable that Tether issuance made significant contributions to artificially high bitcoin prices seen last year."
Others have voiced concern that Tether doesn't actually hold enough U.S. dollars to back all of its digital coins in circulation.
In December, the Commodity Futures Trading Commission sent a subpoena to Bitfinex and Tether. In 2016, the CFTC fined Bitfinex $75,000 for failing to register with the agency and offering "illegal" cryptocurrency transactions. A few months later, hackers stole 119,756 bitcoins from the Caribbean-based exchange.
Bitfinex is one of the largest cryptocurrency platforms in the world by trading volume, and while it is registered in the Caribbean and owned by a British Virgin Islands company, it also has offices in Asia and Europe.
Bitfinex CEO J.L. van der Velde told CNBC in an email that "Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation."
"Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex," van der Velde said.
Tether did not respond to CNBC's request for comment.
Griffin has spent the past decade publishing research on fraud by credit agencies, mortgage fraud by banks, to most recently manipulation of a volatility index known as the VIX.
For the time being, he's turning his attention to the cryptocurrency market, which Griffin said has "not a lot of monitoring going on."
"In general I research things that are potentially illegal, and there's a lot of rumors surrounding potential questionable activity in cryptocurrencies," he said. "That's why it's useful to see what the data says — data speaks."