Major crypto exchange Kraken has issued a scathing response to a recent Bloomberg article about stable cryptocurrency Tether (USDT) allegedly “defying logic” on Kraken’s platform.
The article in question, titled “Crypto coin Tether defies logic on Kraken’s market, raising red flags,” was published on Bloomberg June 29, with comments and analysis from several academics and Andrew Rennhack, a former professional poker player.
Its authors allege that the price of Tether might be manipulated on Kraken, citing “oddly specific order sizes” and the fact that “huge trades move prices about the same as small ones.”
According to Bloomberg, the trades that are taking place on Kraken on a daily basis should be significantly influencing the price of USDT. Instead, the price of the cryptocurrency remains relatively stable –– something viewed by “experts on market manipulation” as a “red flag.”
In response, Kraken published a post on its official blog July 1 stating that Bloomberg’s writers “fail to comprehend basic market concepts such as arbitrage, order books and currency pegs.”
Explaining their somewhat harsh statement, Kraken points out several factors that have not been taken into account in Bloomberg’s report. According to the exchange, arbitrage trading, the small USDT trade volume on its market, and the fact that Tether is allegedly backed 1:1 by U.S. dollars are the three key reasons that lead to the trades on the platform barely influencing the token’s price.
Bloomberg’s article also pointed out “oddly specific order sizes,” citing 13,076.389 USDT as the third-most-common trade on Kraken during the period of writing. According to the news outlet, these trades “could be signals to cheaters’ automated trading programs.”
In turn, Kraken claims to have spoken to the trader responsible for these specific orders. Their reported response was “literally randomly selected.”
The exchange was not the only one to be outraged by Bloomberg’s article, as numerous crypto industry commenters have taken their negative reactions to Twitter and other social networks.
One of them was Mike McDonald, another professional poker player, who weighed in:
“As assuredly the most uninformed piece I have ever read on crypto I think it is a valuable lesson to us to see just how low the standard can be to get published by fairly reputable sources. Small picture a waste of time but big picture a good lesson.”
In response to Cointelegraph’s request for comment on Kraken’s response, a Bloomberg spokesperson simply stated:
“We stand by our reporting.”
Cryptocurrency Tether (USDT) has been the subject of prolonged controversy fuelled by doubts about the fact that all USDT tokens are in fact backed by the same amount of U.S. dollars.
Cointelegraph reported June 20 that a law firm working with Tether unofficially confirmed legitimate dollar-backing, but an official, public audit of the company’s financial resources has not yet taken place.
Kraken is currently the 16th largest crypto exchange in the world by daily trade volumes, seeing about $101 million in trades over the past 24 hours to press time, according to data from CoinMarketCap.
By Andrew Marshall