Short seller Hindenburg Research has its sights on Tether and is launching a $ 1 million “bounty” program for information about the stablecoin company at the heart of the global cryptocurrency market.
Hindenburg’s announcement comes less than a week after the US natural resources regulator fined Tether on allegations that it falsely stated that its digital tokens of the same name were fully backed by dollars.
The growing scrutiny of Tether comes at a time when an increasing number of mainstream investors are looking to enter the fast-growing digital asset market. The group is the largest issuer of stablecoins, assets that help connect traditional markets to the digital asset sector, with around $ 70 billion in tokens in circulation.
Tether’s coins are widely used in cryptocurrency trading, but the group only provides general information on the types of assets the tokens support and does not provide a detailed breakdown of their portfolio.
“We firmly believe that Tether should fully and thoroughly disclose its holdings to the public,” said Hindenburg founder Nathan Anderson. “In the absence of such disclosure, we are offering a $ 1 million bounty to anyone who can provide us with exclusive details on Tether’s alleged reserves.”
Hindenburg said in its announcement that it does not hold positions that bet on falling or rising tether, bitcoin or other cryptocurrencies.
“This Hindenburg Research stunt is a pathetic attempt to get attention,” said Tether. “Tether hates and condemns their actions and transparent motives.”
The company added, “Tether is a pioneer, a special kind in business, and we have great visions for the future.”
It was said that it would “continue to focus on” [its] Customer requirements and defense of the crypto markets ”.
The letter marks Hindenburg’s first offer of a bounty for information. The short-selling group is known for bringing some of the most popular companies public through special acquisition vehicles, including electric truck start-up Nikola and sports betting company DraftKings.
Before becoming a noted short seller, Anderson specialized in researching and detecting fraudulent investment schemes, honing his skills under the guidance of Harry Markopolos, the investigator known for flagging Bernard Madoff’s Ponzi scheme.
Tether last week agreed to pay the Commodity Futures Trading Commission a $ 41 million fine for making misleading statements from at least June 2016 through February 2019 that it had sufficient dollar reserves to keep each of its outstanding stocks Cover stablecoins. Tether did not admit or deny liability.
Its new coin creation-related practices have also come into focus after Celsius Network, a large client, said Tether was issuing new stablecoins in exchange for collateral in the form of cryptocurrencies like Bitcoin as part of its loan program.
The practice is contrary to Tether’s promises that it will only issue units of the world’s largest stablecoin in exchange for hard currency.
Regulators are also paying close attention to developments in the stablecoin industry in general, warning of the potential impact on both customers and overall financial stability, as well as risks such as money laundering and market manipulation.
In September, the chairman of the Securities and Exchange Commission, Gary Gensler, compared stablecoins to “poker chips”. This month, global regulators tabled potential plans to regulate stablecoins in line with payment systems, calling for “little or no credit or liquidity risk”.
Tether has repeatedly said in the past that its tokens are “fully backed by assets sufficient to back the amount of Tether in circulation”.
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