5 days ago, a group of Bloomberg journalists published an article targeting crypto-exchange Kraken for potential price manipulation concerning the stable coin Tether. Bloomberg made note of how “oddly specific order sizes - many of which went out to five decimal points” repeated frequently. Bloomberg News apparently conducted an analysis by pulling more than 56,000 trades between May 1st and June 22 with NYU Professor Rosa Abrantes-Metz and former Federal Reserve Bank examiner Mark Williams.
Bloomberg cried foul play on Kraken’s behalf, asserting that malicious individuals (or parties) may have used automated trading programs that would trade against orders with a unique size. In other words, Kraken engaged in wash trading, a banned practice in traditional securities markets not regulated within the crypto space. What could come of this is an artificial price manipulation of Tether, and the crypto market as a whole.
Kraken had something say. On July 1st, the exchange posted a scathing response directed at Bloomberg. It argued that Bloomberg failed to “comprehend basic market concepts such as arbitrage, order books, and currency pegs.” In its response, Kraken laid out several reasons as to why Bloomberg’s claims held no credence.
The fact that Kraken only accounts for 0.1% of aggregate daily USDT trade volume exonerates the exchange from any sizable liability. Perhaps Bloomberg should have taken that into account before awakening the Kraken.