The US Justice Department is investigating whether bitcoins record-breaking performance last year was caused by market manipulation Late last year the value of a single bitcoin hit 9 143 climbing nearly six points in just 24 hours for a market cap north of 152 billion According to a recent report from Bloomberg the DoJ is looking into whether traders used Tether a controversial cryptocurrency that is allegedly backed 1 1 by the US dollar to help bitcoin reach its record highs Federal prosecutors started a criminal probe into the cryptocurrencies earlier this year and now suspect that crypto exchange Bitfinex might have used Tether to illegally coordinate bitcoins prices In fact Bitfinex has the same management team as Tether and when new coins are released theyre mostly launched on the exchange Sources told Bloomberg that the Justice Department is investigating how Tether creates new coins and why they enter the market predominantly through Bitfinex The probe was sparked by a study published in June by University of Texas finance professor John Griffin and graduate student Amin Shams They said at least half of the boost in bitcoin was due to price manipulation explaining that Tether was used to buy bitcoin when it was declining which helped stabilize and manipulate the cryptocurrencys price Even when it was flying high bitcoin had its share of detractors Goldman Sachs CEO Lloyd Blankfein said that maybe bitcoin is a kind of a bubble adding I dont like it Im not comfortable with it Im kind of an old dog to be absorbing that kind of a new trick And JPMorgans chief executive Jamie Dimon called the cryptocurrency a fraud The currency isnt going to work the executive said You cant have a business where people can invent a currency out of thin air and think that people who are buying it are really smart In addition governments around the globe including Russia China the UK and the US have issued warnings about the risks associated with cryptocurrency LATEST INSIGHTS Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation thats reshaping the payments and commerce ecosystem Check out the latest PYMNTS study The AI Gap Perception Versus Reality In Payments And Banking Services bitcoin bitfinex cryptocurrency justice department market manipulation News Tether Whats Hot