Is the Stablecoin Tether (USDT) really covered by enough reserves? This question has been hanging like a sword of Damocles over the crypto space for a long time.
But this could soon be finally clear
Not only the central banks let the money printing machines run at full speed in 2020. Tether Limited, publisher of the stablecoin Tether, also created more USDT tokens than ever before. Stablecoin critics question whether every USDT is really covered 1: 1 by the reserve of Tether Limited. But soon there could be final clarity about Tether’s financial position: On January 15, Tether and iFinex, operator of the Bitcoin exchange Bitfinex, had to give the New York Public Prosecutor’s Office (Office of the Attorney General, OAG) access to their books. Both companies are subsidiaries of DigFinex Inc. There is also overlap on the executive floor.
Tether and Bitfinex in the crosshairs of the New York Attorney General
The OAG, then headed by Barbara Underwood, has had Bitfinex and Tether in its sights since 2018. At the center of the investigation is the allegation that the sister companies are said to have committed a criminal offense under Article 23-A of the New York Trade Act. The article concerns “Fraudulent Practices Relating to Stocks, Bonds and Other Securities”.
Since January 1, 2019, Underwood’s successor Letitia James has been concerned with the Bitfinex / Tether case. In late April 2019, she filed a public lawsuit against iFinex with the New York Supreme Court. The allegation: Bitfinex is said to have secretly borrowed over $ 850 million from Tether in 2018 to cover up a liquidity shortage. Numerous Bitfinex customers complained about problems with withdrawing funds. That, in turn, had fueled rumors of a bankruptcy on the Bitcoin exchange.