If you believe New York Attorney General Letitia James’s court filings, there’s a great deal of support for the accusations, and we may soon find out more. Bitfinex and Tether face a January 15 deadline to transfer millions of pages of documents to James’s office. Tether is also facing a major class-action lawsuit accusing it of contributing to “the largest bubble in human history”: In 2017, Tether printed a flurry of its currency in patterns that appeared to be linked to rises in Bitcoin, as an influential scholarly paper later found. The bubble popped, with Bitcoin losing 45 percent of its value across five days in December 2017. Billions of dollars of value disappeared almost overnight, with the decline continuing through 2018.
Tether’s importance, and its value to the overall crypto economy, has vastly increased since then, when only a few billion Tethers were in circulation. Now there are more than 24 billion Tethers out there. In the first week of January, Tether printed more than 2 billion USDT. (It’s worth noting that it’s exceedingly hard to redeem USDT from Tether Limited for U.S. dollars; Tether requires a $100,000 minimum per transaction, along with a 0.1 percent fee.)
The manic production of Tethers has become a joke online. Posts from accounts that monitor large cryptocurrency transactions, such as @glassnodealerts and @whale_alert, attract sardonic replies from people accusing the company of running a Ponzi scheme and rocket ship emojis from traders who want to see the company pump the Bitcoin market even more. A popular meme shows a photo of a speeding armored truck bedecked in the Tether logo, its doors flung open, money flying into the air.