Tether, the controversial cryptocurrency that has been accused of artificially pumping up cryptocurrency prices, issued $300 million worth of new tokens Tuesday, according to Omniexplorer.info. This is the second time that Tether has issued new coins this year. In February, it had released 146 million tokens in USD and euros.
Tether trades at parity with the U.S. dollar and is mostly used as a mechanism to transfer holdings from one cryptocurrency to another, instead of fiat currencies. It is referred to as stablecoin because its price movements are not prone to the wild swings that have characterized other cryptocurrencies. This is because it claims to have an equivalent amount of USD in bank accounts as the number of coins it has in circulation. (See also: Tether Tantrum and the Need for a Stablecoin.)
However, recent reports have suggested that Tether’s claims may be false. Bitfinex, which has a substantial holding in Tether, has refused to submit itself to audits. Along with Tether, the exchange was subpoenaed by the Commodities and Futures Trading Commission (CFTC) earlier this year. (See also: Tether and Bitfinex Crypto Companies Subpoenaed By U.S. Regulators.)
San Francisco-based Wells Fargo also ended its correspondent bank relationship with Bitfinex last year. Bitfinex announced a new relationship with Dutch bank ING Group Inc. earlier this year.
The allegations against Tether are important because they have a bearing on crypto price movements. Research released by Bitfinex’ed, a Twitter account that has taken the lead in criticizing Tether, suggests that a decline in bitcoin prices is accompanied by a fresh issue of Tether tokens. The report highlighted two instances of such an occurrence last year. The new tokens issued have also coincided with a slump in cryptocurrency prices. Since Tuesday, when Tether made its announcement, prices for coins have mostly trended upward. Not surprisingly, news of the fresh round of tokens issued by Tether elicited a caustic tweet from Bitfinex’ed:
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