The cryptocurrency operator Tether says it has doubled the number of its digital tokens in circulation in three months, taking their total value to $50bn just weeks after the New York attorney-general fined the company and banned it from the US state.*
In a tweet, Tether said it was growing by $10bn a month, and suggested the total value of its cryptocurrency could hit $100bn by the end of this year. It claims to match each Tether with one US dollar in reserves, making this a so-called stablecoin.
Tether must now report on the assets backing the coin by May 19, after the operator and the related trading platform Bitfinex pledged to offer more transparency on its reserves under the terms of its $18.5m settlement with the New York attorney-general’s office in February.
“They have to show how much is in digital assets, how much is in Tether gold and how much is liquid cash,” said Bennett Tomlin, a data scientist who has been critical of Tether and Bitfinex.
New York officials, in a keenly anticipated ruling this year, accused Tether and Bitfinex of covering up “massive” financial losses, adding the claim the cryptocurrency was fully backed by US dollars at all times “was a lie”.
At times, Tether had “no access to banking, anywhere in the world”, state attorney-general Letitia James added. Tether and Bitfinex agreed to pay a fine but admitted no wrongdoing.
In addition to barring Tether and Bitfinex from operating in New York, James mandated several reporting requirements within 90 days of the settlement. This includes detailing Tether’s reserve accounts and the categories of its assets.
In March Tether released an assurance opinion by the auditor Moore Cayman, which said that on February 28 it had sufficient assets to be fully backed. However, it is still unclear whether that backing persists at all times, and in what form.
The continued growth at Tether suggests that users are unfazed. “Tethers have always been fully backed,” said Tether’s general counsel Stuart Hoegner in a statement.
Hoegner said Tether had voluntarily provided the New York attorney-general with substantial information about the composition of its reserves.
Tether’s surging market capitalisation comes as largely unregulated cryptocurrencies have become increasingly mainstream, with the $75.9bn listing of the crypto exchange Coinbase on Nasdaq this month. Last week Coinbase listed Tether on Coinbase Pro, its trading platform designed for individual traders and cryptocurrency enthusiasts.
*= This story has been amended to reflect the fact that Tether and Bitfinex agreed to a settlement with the state of New York.