Tether is the third-largest issuer of stablecoins. Its market value is $62 billion, behind Ethereum and Bitcoin. The developers of Tether claimed that each stablecoin is supported by one U.S. dollar to maintain a constant value. It needs banks to keep its money and process customer transanctions.
This is not the first time that Tether attracted regulatory scrutiny. In February this year, the stablecoin issuer and Bitfinex, a cryptocurrency trading platform agreed to pay $18.5 million in penalties to settle the investigation of the New York Attorney General’s Office in connection with allegations that the firms covered-up $850 million in losses and falsely claimed that they have sufficient funds to back Tether tokens.
“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system,” said Attorney General Letitia James in a statement in February.
