Cryptocurrency Tether released a breakdown of its holdings last week, leading some experts to believe the coin might not be as tied to the US dollar as it claims to be. Tether was first created in 2014 – when it was known as RealCoin - by Brock Pierce, Reeve Collins, and Craig Sellars. When it was first created, Tether touted itself as one hundred per cent backed by the US currency. In other words, it was somehow linked to actual cash.
However, when the New York Attorney General read this report, it decided it would be best to conduct a thorough investigation into Tether. In that investigation, the NYAG discovered that Tether had, in fact, loaded funds into a couple of bank account a short time before the accountant looked over their books and then released the funds as soon as the accountant had left.
The end result of that particular investigation was an US$18.5 million fine as well as a ban from operating out of New York. Moreover, it laid out how Tether had lied to the public. The breakdown purports to show that Tether is, at the very least, mostly backed by cash, with Tether claiming that 76% of its reserves – total consolidated assets - are in cash or “cash equivalents”. If a bank had admitted this breakdown, it would be grossly inefficient.