Analysts Laugh Off Recent 'One-Whale Theory' of BTC's 2017 Bull Run

The Tether stablecoin and its issuer Bitfinex played a key role in the alleged hoax, the researchers also argued.

Tether untethered: Bitfinex's legal troublesOriginally launched in 2014 as Realcoin, Tether was one of the first stablecoins to claim that it is backed by the United States dollar at a 1:1 ratio.

Its authors - John M. Griffin and Amin Shams of the University of Texas and University of Ohio respectively - came to the conclusion that Tether was "Used to provide price support and manipulate cryptocurrency prices" after studying transaction patterns of the stablecoin.

According to the researchers, Tether and Bitfinex were responsible for as much as half of the Bitcoin price rise in December 2017, when the cryptocurrency reached its all-time high at around $20,000 per token.

"Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies."

In 2017, Bitfinex failed to have its accounts audited by a third party to prove that "Every tether is always backed 1-to-1, by traditional currency held in our reserves," as the company's website stated at the time.

Currently, the stablecoin's website simply states that "All tethers are backed 100% by Tether's reserves," therefore avoiding any direct mentions of U.S. dollars.

According to the firm's founding partner Kyle Roche, Tether and Bitfinex are responsible for creating the "Largest bubble in history."

"All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets. It is irresponsible to suggest that Tether enables illicit activity due to its efficiency, liquidity and wide-scale applicability within the cryptocurrency ecosystem."

According to Griffin and Shams, the patterns "Are consistent either with one large player purchasing Tether with cash at Bitfinex and then exchanging it for Bitcoin, or Tether being printed without cash backup and pushed out through Bitfinex in exchange.for Bitcoin." Nevertheless, when contacted by Cointelegraph, the scholars could not specify who exactly was behind the price movement.