Tether continues top stir up controversy as it cancels its audit and issues $300 million more worth of tethers.
The thing with Tether is that it’s supposed to be backed up by US dollars in a one-to-one ratio. But no one has actually been able to confirm that those dollars in fact exist in their bank account since there has never been a successful external audit completed.
Additionally timing of Tether issuance has had a suspicious effect on Bitcoin’s price. It always seemed to coincide with Bitcoin’s price increase, usually at times when Bitcoin was falling in value, leading some to suspect marker manipulation.
Funny enough this has happened again last week as the price of Bitcoin rebounded by 6% shortly following the issuance of $300 million worth of Tether tokens.
Anonymous blogger Bitfinex’ed, who is no fan of Tether – or associated exchange Bitfinex – to put it mildly, posted on Twitter at the time that the release of such a large amount of Tether once again caused an increase in Bitcoin’s price.
Pantera Capital chief investment officer Joey Krug expressed concerns back in January 2018, that these rallies had led to Bitcoin’s price rise to an all-time high of $20,000 in December of 2017.
“This became more and more concerning, because every time the markets went down, you have seen the same thing happen. It could mean that a lot of the rally over December and January might not have been real.”
Even the creator of Litecoin, Mr SatoshiLite himself, expressed concerns around the matter all the way back at the end of November 2017.
Still No Audit
Despite all this criticism and many promises, Tether have still not completed an external audit of their accounts, which would easily dispel their critics’ claims of financial impropriety.
The reasons given by Tether for not completing their audits have been shaky to say the least. Since 15th September of 2017, when their accounts were last checked and confirmed to match the issued tokens at $442 million, there has been no further confirmation of their fiat reserves.
In theory Bitfinex exchange who issue Tether, make enough profit through trading and lending fees, to have enough cash reserves to cover the issued Tether tokens, however until we see a full independent audit completed, doubt will remain. And doubt is the last thing we need in these volatile crypto markets, so hopefully Tether will provide a full and transparent audit soon.