Tether claims that each USDT token is backed with the USA dollar on a 1-to-1 ratio, however, many Tether critics have doubted that.
Cryptocurrencies are still reeling after a record $500 million heist from Japanese exchange Coincheck on January 26, further intensifying calls for increased oversight in global trading hotbeds such as South Korea. Each USDT unit is backed by a U.S Dollar held in the reserves of the Tether Limited and can be redeemed through the TetherPlatform. As of Tuesday, there were as much as $2.3 billion outstanding tokens were there.
Scandals and regulation moved prices in cryptocurrency markets during the last 24 hours. Alternatively, the company also failed to get its accounts audited by an authorized firm. Despite Tether's claims that each of it tokens has a USA dollar backing it, the company has been less than forthcoming about its holdings.
The sudden announcement of the audit's cancellation may fuel the fires of doubters who regard Tether with suspicion.
We confirm that the relationship with Friedman is dissolved. It is not possible to buy Tether directly using US dollars. The overall valuation of cryptocurrency markets also crashed to $500 billion last night. The skepticism within the crypto community started growing when Tether released a massive amount of tokens worth 50-100 million, especially at a time when there are a lot of questions being raised about its operations and has left many to think that who is depositing this huge amount. They compared it to fractional-reserve banking - a system many bitcoin users would like to escape.
A document on Tether's website, compiled by accounting firm Friedman LLP, shows it had $443 million and 1,590 euros ($1,970) in bank accounts as of September 15.
While the companies don't disclose on their websites or in public documents where they're located or who's in charge, Ronn Torossian, a spokesman for the firms, said in a December 3 email that Jan Ludovicus van der Velde is the chief executive officer of both. However, the story was updated an hour later, adding that the subpoenas were sent last month, on December 6, 2017.
"'This became more and more concerning, because every time the markets went down, you have seen the same thing happen", Joey Krug, the co-chief investment officer at the crypto investment fund Pantera Capital told the New York Times.
"Be careful selling here, because my tinfoil hat says the insiders have already manipulated the market with their own insider selling far ahead of today's announcement", wrote one member.
Many long-time cryptocurrency investors declared that if digital-asset prices did plummet, they would keep buying all the way down.