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The inner workings of Tether have been under constant scrutiny and they’re in the spotlight again after issuing 300 mln new Tether tokens last week. To understand why Tether has been the subject of controversy for the past six months, one should remember how this cryptocurrency works.
According to Tether, USDT tokens are “backed’ by US Dollars in a 1:1 ratio. In the last six months, Tether have been constantly accused of not having sufficient fiat reserves to back the tokens that they periodically issue.
That’s why some industry critics paid special attention to the changes in a price of Bitcoin that have come after the issuance of new Tether tokens. Given that Tether is equal to one dollar, users have been buying various cryptocurrencies with Tether tokens. If these tokens are not backed by an equal amount of dollars, cryptocurrencies prices, in particular, may have been irregularly inflated.

Point proven again?

Casting aside speculation on the reserves backing Tether tokens, the issuance of 300 mln new USDT last week once again coincided with a six percent rebound in the price of Bitcoin.
This prompted fresh reactions from critics - with outspoken anonymous blogger Bitfinex’ed leading the charge with another heated tweet. Tether and sister company cryptocurrency exchange Bitfinex threatened legal action against critics in December.
In January 2018, Pantera Capital chief investment officer Joey Krug expressed concerns that these rallies had led to Bitcoin rise to an all-time high in $20,000:
“This became more and more concerning, because every time the markets went down, you have seen the same thing happen. It could mean that a lot of the rally over December and January might not have been real.”

Tether refute claims, but still unaudited

Prompted by a subpoena from US regulators in December 2017, Tether reacquired the services of Friedmann LLP to conduct an audit on it’s US dollar reserves. However, a month later, news broke that the Tether had parted ways with their auditors, meaning no audit results were ever disclosed.