Prominent cryptocurrency exchange Kraken recently published a post on its blog titled “On Tether: Journalists Defy Logic, Raising Red Flags” and presented its side of the story on the Tether price manipulation alleged by prominent publication Bloomberg. The exchange noted that it accounts for less than 0.1 percent of the daily trading volume of the controversial cryptocurrency, suggesting that accusations of “wash trading” are inaccurate at best. It also brought sharp criticism to journalists who accused the exchange.
Kraken Targets Bloomberg Reports
On their blog, Kraken points to a Bloomberg report that named the exchange as potentially participating in Tether price manipulation.
The exchange writes:
“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? If we are to take up our pitchforks against market manipulation, guide your torches toward this illumination: the Bloomberg News piece was published on June 29th, the last business day of trading for Q2, and expiration date of numerous futures contracts. It raises red flags.”
The exchange further suggests that the USD pegged coin Tether (USDT) is a stable currency, and each coin is pegged to the US dollar, making the value stable at $1. Because of this, the currency doesn’t experience the same level of volatility that prominent coins like Bitcoin or Ethereum could. It said that traders have confidence in the currency due to the stable prices, and as a result, they place larger orders in the USDT markets. Because of the dollar-pegging, the price changes in USDT are minimal.
Kraken Only Trades in Small Volumes of USDT
The exchange suggests that it only trades in 0.1 percent of the aggregate daily volume of USDT. Kraken also commented that it is not an arbiter of the coin’s prices. Instead, prices are decided by traders. It further stated:
“After reading the Bloomberg article, we scratched our heads, questioning just what type of manipulation was being claimed.”
“Price manipulation? Is it so hard to believe that an asset-backed stablecoin could trade, well… with so much stability? As we discussed previously, one need only take a look at the order book to understand why trades of different sizes result in little-to-no change in price levels. If an order book is too hard a concept to grasp, think about stock at your grocery store. Why doesn’t the price on avocados change every time you put one in your basket?”
The exchange seemed baffled by the allegations and has come back with homework on its order books. It asked Bloomberg to test its hypothesis, adding that the “sensational” report helped journalists in “walking their reputations off a cliff. It defies logic.”