In a blog post satirically entitled: On Tether: Journalists Defy Logic, Raising Red Flags. The exchange, Kraken has fought back against the inference that they have taken part in market manipulation and in particular, wash-trading.
The original article by Bloomberg entitled: Crypto Coin Tether Defies Logic on Kraken’s Market, Raising Red Flags, seemed to relay that large transactions occurring from Tether (the well known stable coin tied 1:1 with USD) was not reflective of trades conducted within the exchange. They conjected that this may be due to wash-trading, in which a market is manipulated to make it appear to have greater supply and demand.
This led to a retort from the exchange, calling out Bloomberg news for failing to “comprehend basic market concepts such as arbitrage, order books and currency pegs” also jumping on other media outlets for following suit.
The blog post continues to commend the crypto community for debunking the “Tether takedown”, listing a myriad of social media comments vilifying the article.
Quite rightly the exchange’s biggest worry was lawmakers picking up on the conjecture and taking as fact without verification of such:
“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?” the post reads.
The Kraken blog goes on to explain, clause by clause and in lengthy detail just how USDT works. First describing its ability to stay stable through arbitrage and its collateralization with the US Dollar; continuing then to speak of the absurdity of being tagged as the arbiters of Tether, citing their less than 0.1% of aggregate daily USDT volume.
The blog then moves onto allegations of manipulation, questioning as to what kind of manipulation the publication could have possibly been referring to; stating that in the case of wash-trading USDT would be a fairly strange choice due to its status as a pegged currency:
"If you’re looking around for potential wash trading in USDT, we recommend you look elsewhere. That said, it’s not clear what harm could come from wash trading of a pegged asset against its peg. In Kraken’s case, USDT is only traded against its peg, USD, which itself is an explicitly manipulated asset.".