Tether, the Hong Kong-based company that behind the USDT cryptocurrency and cryptocurrency exchange Bitfinex have been linked with several controversies related to Bitcoin price manipulation. Two researchers at University of Texas known as John M. Griffin and Amin Shams claimed that Bitcoin prices were artificially inflated in December when the largest cryptocurrency in the world, according to market cap, reached its all-time high –$20,000. Reportedly, CFTC subpoenaed Tether and Bitfinex in December 2017.
Jan Ludovicus, CEO of Tether and Bitfinex insisted that the two companies are completely separate from each other. However, various media outlets pointed out a ‘mysterious’ relationship between the two. Due to all this, Tether has been under scrutiny in the crypto world. In an attempt to better the situation, Tether hired, Louis Freeh, a former FBI director, to conduct an investigation of its compliance and transparency, including a check of its bank balances.
For those aren’t aware, USDT was meant to be ‘stablecoin’ that is more like a surrogate for the U.S. dollar, so that the Bitcoin holders can trade into as a ‘safer store of value’, Yahoo Finance reported. The company Tether claim that all USDT tokens are backed by U.S. dollars. However, regulators are skeptical about it.
According to Freeh’s report, Tether holds the balance it claims to hold. “On June 1, without Tether or its two banks knowing the selected date ahead of time, FSS performed an “account snapshot” and found that Tether held a total of $2.545 billion, which indeed covered the 2.538 billion USDT coins in circulation at the time, plus a cushion of about $7 million,” Yahoo Finance reported. The crypto company even publicly posted the FSS findings’ confidential report , in June.
According to BitcoinExchangeGuide, Tether commented about the hire of former FBI director, stating, “Tether and related parties have been the subject of scrutiny over the course of the past several months . . . It is our belief that much of the speculation and negative reporting has been the result of misunderstandings of how it functions.”
They added, To address allegations head on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves. . .Earlier this year Tether engaged Freeh, Sporkin & Sullivan LLP (FSS) to review bank account documentation and to perform a randomized inspection of the number of Tethers in circulation and the corresponding currency reserves.” Freeh discussed the USDT investigation, one of his first crypto-related projects with Yahoo Finance. He mentioned that his firm would like to work on more crypto-related projects and are trying to add more staff for it.
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