San Francisco-based cryptocurrency exchange Kraken has responded to the recent Bloomberg News report suggesting that a review of Tether trading on the exchange raised red flags that could indicate possible market manipulation. In a blog post published Sunday, the exchange argued that it was Bloomberg News’ own report that was trying to manipulate the market.
“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?
If we are to take up our pitchforks against market manipulation, guide your torches toward this illumination: the Bloomberg News piece was published on June 29th, the last business day of trading for Q2, and expiration date of numerous futures contracts. It raises red flags.”
Kraken used the post to explain why Tether’s lack of price volatility was anything but a “red flag.” The exchange noted that Tether’s dollar reserves were responsible for providing it with price stability, since the token is pegged to the U.S. Dollar:
“Price manipulation? Is it so hard to believe that an asset-backed stablecoin could trade, well… with so much stability? As we discussed previously, one need only take a look at the order book to understand why trades of different sizes result in little-to-no change in price levels. If an order book is too hard a concept to grasp, think about stock at your grocery store. Why doesn’t the price on avocados change every time you put one in your basket?”
The exchange also addressed concerns over volume manipulation and said that USDT trades represent less than one percent of its trading volume each day. Kraken also denied evidence of wash trading, though it said that such trading would be harmless even if it were occurring since it would involve “wash trading of a pegged asset against its peg.”
While the recent Bloomberg report did say that there was no evidence that Kraken was doing anything wrong, the exchange clearly felt the need to clear the air and refute what it sees as false assumptions and faulty conclusions. The company reiterated its commitment to a fair and open market:
“We take allegations of manipulation very seriously. We strive to operate a platform that is open and fair to all of our users. We understand the significant level of trust our customers place in us to custody their assets and to provide them a safe trading experience, and we would never jeopardize our reputation by engaging in or supporting manipulation on our platform.”