Tether’s parent companies are being sued by the New York Attorney General for allegedly trying to hide the loss of more than $850 million in comingled client and corporate funds. Tether has denied the allegations.
The private company that issues Tether used to claim it’s 100% covered by fiat reserves, until it disclosed in a court filing earlier this year that only 74% of the Tethers are covered by cash and short-term securities. Tether is not independently audited.
Read More: Backers of Crypto Coin Tether Sued Over Market Manipulation
John Griffin, a finance professor at the University of Texas at Austin, said that half of Bitcoin’s runup in 2017 was the result of market manipulation using Tether. Last year Bloomberg reported that the U.S. Justice Department is investigating Tether’s role in this market manipulation. Tether has disputed the manipulation claim.
Still, traders -- and now merchants and retail consumers -- don’t seem to care.
“The fact that they have so many users just goes to show even if there’s nothing backing it, people are still using it,” Mackay said.
This article was provided by Bloomberg News.