Tether is a type of cryptocurrency known as a stablecoin, pegged to the value of traditional fiat currencies like the US dollar. Bitfinex is a cryptocurrency exchange that has been associated with Tether.
One significant concern raised by critics is whether Tether has sufficient reserves to back the amount of USDT tokens in circulation. There have been allegations that Tether did not hold a 1:1 ratio of reserves to the tokens it issued, which is a claim central to the stablecoin concept.
Legal inquiries have also been conducted to determine whether Bitfinex and Tether participated in market manipulation. Tether and Bitfinex are embroiled in a legal dispute with the New York Attorney General (NYAG). Using Tether's reserves to conceal the losses, the NYAG accused Bitfinex in 2019 of hiding the loss of $850 million in client and corporate cash. The case brought into question Bitfinex and Tether's financial operations and transparency.
It was announced in February 2021 that Bitfinex and Tether had struck a deal with the NYAG. Bitfinex and Tether agreed to pay $18.5 million and provide monthly reporting of their reserves as part of the settlement. There was no condition on the corporations' admission of wrongdoing in the settlement.
