It's entirely possible the bubbles were manipulated sadly. Maybe that's a good thing though. Bitcoin needs time to grown and not just shoot up and down on a whim.
I don't understand why he would use an account to buy at a surplus rate and not use other accounts to sell at those rates. I.e. why not buy and sell from himself? That way he would not need to include fiat in the equation at all. Buying from his customers would mean having to produce fiat.
Well he needed the fiat coming in and it didn't matter about money going out because he blocked the withdrawls so no money went out eventually and that's how people lost pout because there was no real money or coins.