Monday, December 5, 2022

NEM’s Lon Wong: Cryptocurrency Price Manipulation Is ‘Unavoidable’

NEM’s Lon Wong: Cryptocurrency Price Manipulation Is ‘Unavoidable’

As president of the Foundation, Lon Wong feels price manipulation is just an aspect of cryptocurrency trading investors need to get used to. After all, it happens in other markets too. Could he be right?

Also see: New ‘Coinbase Commerce’ Makes Digital Payments Simpler, Integrates With Shopify

Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts

“Price manipulation is not something new,” he explained in a recent interview with CNBC. “You see it in mainstream markets as well. We are in a very nascent, growing phase of our industry, and these things are unavoidable.”

Regulation Is Good… but Is It Ready?

Since the recent Coincheck hack that saw over $500 million in NEM funds stolen by hackers, Wong is a strong advocate of digital currency regulation as a means for halting price manipulation and similar problems in the future.

However he pointed out a serious issue: regulators, he suggested, are too “green” when it comes to making their mark on cryptocurrency and lack the appropriate knowledge of what to do and how to make any lasting impact.

He said that, over time, regulators are bound to learn more — which will ultimately put them in a more authoritative position, though long stretches of time could pass before that day comes.

“Regulators today are in a learning curve, and many of them, I would say, have insufficient knowledge and experience to actually look at how to regulate cryptocurrencies, especially in exchanges … At the end of the day, we should see both sides of the divide – the exchanges and the regulators – coming together and reaching a conclusion regarding how to get to the next steps.”

A Long History of Price Manipulation

Financial entities like bitcoin, for example, are still widely vulnerable to manipulation tactics.

A common belief behind the drastic hikes in digital currency prices last year is that bitcoin may somehow be connected to the crypto-token Tether, which could potentially be “propping up bitcoin prices,” as one source suggested. It then directed visitors to an anonymous report that claimed the bitcoin price would fall by half if it weren’t for its current Tether-based support:

“Some people think bitcoin’s spectacular price rise last year was manipulated by a crypto-token called Tether that’s supposed to be pegged to the U.S. dollar… Now, an anonymous report answers the question: What would bitcoin be worth without Tether? The answer: around $4,500, based on the current bitcoin price.”

Additionally, bitcoin’s first major rise and fall in late 2013 and early 2014 is widely believed to have been fully orchestrated by Mt. Gox executives.

A Light at the End of the Tunnel

Wong said there may be some good news in the mix, though. He suggested that, while manipulation is running rampant and likely to continue for the time being, it has more to do with bitcoin’s age and lack of maturity. He feels things will improve in the coming years as the blockchain changes form and stronger security is implemented.

“It will be a thing of the past,” he assured.

“Perhaps maybe when it is more mature, but as far as manipulation is concerned, and as far as what we are concerned about at NEM, we are more interested in the promotion of technology than the prices.”

For a report further detailing the potential for manipulation in the bitcoin market, click here.

Is manipulation (if it exists) likely to continue into the future? Post your comments below.

Images via CoinMarketCap, Pixabay

Bitsonline Email Newsletter