A global forensic research firm is offering a $ 1 million (£ 724,185) reward to anyone who can provide information about the “stablecoin” support for the Tether cryptocurrency.
New York-based Hindenburg Research said Tuesday that it had doubts about Tether’s legitimacy given the “sparse reports” it received, the company said in a press release.
“We strongly believe that Tether should fully and thoroughly disclose its holdings to the public,” said Nathan Anderson, one of the founders of Hindenburg, in a statement. “In the absence of such disclosure, we are offering a $ 1,000,000 bounty to anyone who can provide us with exclusive details on Tether’s alleged reserves.”
“Cynical premium”
On Thursday, Tether responded to Hindenburg’s suggestion by saying the company’s “cynical premium” was a “pathetic request for attention”.
“Tether’s history of always serving our customers’ needs while keeping track of the evolution of regulations and industry standards demonstrates our primary commitment to our stakeholders through trust and innovation,” Tether said in a statement.
Hindenburg’s investigation comes as Tether survives a barrage of legal challenges, particularly from the New York City Attorney’s Office and the Commodities Futures Trading Commission (CFTC).
In February, Tether agreed to pay more than $ 18.5 million to settle allegations that it failed to register as a New York stock exchange.
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Last week, the CFTC ordered Tether to pay more than $ 42.5 million.
About stablecoins
Stablecoins are digital assets that are backed by either a fiat currency, another cryptocurrency, or another exchange-traded product. Some of the most popular examples are Tether, which is said to be backed by the US Dollar, PAX Standard, and True USD.
However, some have raised concerns about the quality of these assets as there are no reporting requirements related to the crypto space.
On October 7th, Bloomberg Businessweek released a report with detailed documents showing that Tether has paid billions of dollars to Chinese companies and may even hold debts from ailing Evergrande company.
The report also states that Tether has made similarly sized loans to Celsius Network, another cryptocurrency company that has come under regulatory scrutiny in states like New Jersey, Texas, and Alabama.
Read more: Global banking risk group warns of threat from cryptocurrencies
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