Tether, a cryptocurrency token that is supposedly backed by the US dollar, has been spent on Bitcoins at key instances to support its price, reveals a paper published by a University of Texas professor.
The pattern has helped drive Bitcoin prices to a record high in December, says John Griffin, professor in finance, who in 2017 has also shed light on a potential manipulation of the VIX benchmark index.
Tether is pushing back against speculation that it might not be completely backed up by US dollars. The company also took exception to being accused of being instrumental in a large-scale Bitcoin price manipulation scheme.
Yesterday, the Tether team put out a “transparency update” that said a Washington, DC law firm co-founded by former FBI director Louis Freeh can attest that the number of Tether tokens in circulation indeed matches that of real dollars held by the company in reserve.
According to the report, Tether approached the firm this year and asked it to “review bank account documentation and to perform a randomized inspection of the number of Tethers in circulation and the corresponding currency reserves.”
Tether says firm found that the amount of real dollars in the bank “is nearly equal” to the $2.54 billion worth of Tether coins out there. The report could calm the waters a bit, but it’s not a proper audit, so it won’t quiet the skeptics.
Meanwhile, the company’s CEO denied to Bloomberg that any manipulation has occurred, and its general counsel was quoted in the same piece as claiming that “an audit cannot be obtained” because the cryptocurrency market is too new to the big accounting firms. The saga continues.