OPINION / ANALYSIS
Tether is the largest stablecoin by market cap.
The problem: the cryptocurrency is minted and distributed by a company known to have acted unethically in the past.
Here’s 6 times Tether has run into legal trouble:
1 – In February 2021, Tether and its sister company Bitfinex paid a settlement of $18.5 million to the New York Attorney General (NYAG) for misrepresenting its reserves. According to the NYAG:
“Tether made false statements about the backing of the “tether” stablecoin.”
Both Tether and Bitfinex were ordered to cease trading in the state of New York.
2 – In October 2021, Tether and Bitfinex paid a settlement of $42.5 million to the Commodity Futures Trading Commission (CFTC) for misrepresenting its reserves. According to a press release by the CFTC:
“The [CFTC] … issued an order simultaneously filing and settling charges against [Tether] for making untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin.”
3 – Tether is currently under investigation by the United States Department of Justice (DOJ) for possible bank fraud. Tether is suspected of misleading banks by hiding the fact its transactions were linked to cryptocurrency.
4 – Tether has been named in multiple class-action lawsuits. The company is currently being sued for allegedly engaging in “unlawful and deceptive” practices.
5 – Tether executives mostly keep a low profile, and rarely speak to the media. Some of Tether’s known employees have previously worked for companies with a history of fraud.
One example is Stuart Hoegner, the general counsel for Tether and Bitfinex. Hoegner previously worked for a shady online poker company that allowed certain parties to cheat.
6 – Tether refuses to provide an independent audit, despite years of requests. An independent audit would ease doubts that Tether’s coins are fully backed and it isn’t printing money out of thin air.
While this doesn’t necessarily prove that Tether is an outright scam, the company is doing very little to ease people’s doubts.
Either Tether is backed like it says it is, or its a house of cards waiting to collapse.