When Bitcoin was engulfing the public conscious and turning into a manic speculative asset toward the end of 2017, finance professor John Griffin was busy analyzing 2TB of crypto trading data. What he found shook the entire cryptocurrency ecosystems. Along with his coauthor and doctoral student Amin Shams, Griffin focused on a stablecoin — Tether, which is pegged to the US dollar 1:1. The two noticed how Tether was used to manipulate the crypto market. Now the professor at the University of Texas at Austin is diving deeper into the world of cryptocurrencies.
Exposing Tether and Bitcoin Connection
Tether, the US dollar pegged stablecoin that has been controversial since its inception, was said to be used to manipulate Bitcoin prices. Griffin and Shams claimed in their paper that that as soon as Bitcoin fell to a certain level, some accounts were used to make purchases using Tether, which helped in stabilizing prices. The two researchers also said that half of Bitcoin’s gains in 2017 could be ascribed to Tether.
Their paper, which was read across the globe, contributed to the fall of cryptocurrency prices. Tether’s CEO, J.L. van der Velde, said that Tether coins couldn’t be used to prop up Bitcoin prices.
Previously, Griffin had also claimed that VIX, the popular volatility benchmark of the industry, is rigged. He basks in the impact that his work has made, suggesting:
“I not only want to understand the world but make it better.”
According to him, “data leaves footprints, and it leaves tracks. And sometimes it speaks.”
Focusing on Financial Evil
Griffin said that he wants to focus his research on financial evil, quoting a passage from the Bible that reads:
“Have nothing to do with the fruitless deeds of darkness, but rather expose them.”
However, some people and organizations that he has targeted with his reports claim that he is not exposing wrongdoing but misreading data in a market he has very little experience in. Cboe, which was the center of the VIX index controversy, rejects Griffin’s theory, saying:
“The academic paper’s analysis and conclusions are based upon a fundamental misunderstanding about how VIX derivatives are traded and settled.”
Griffin, on the other hand, suggests that he understands how the crypto market works but fears that his VIX paper had turned into a how-to guide for manipulators. A significant number of people have sued Cboe for the said manipulation, but Griffin doesn’t intend to work with them, despite several requests to do so. Griffin is getting more attention as time passes by, and there is a possibility that he would work as a consultant in the future.