Tether is a highly capitalized cryptoasset that is distinguished in the space by maintaining a dollar peg to the price of its asset. The growth of this asset has been incredible, as has been the speculation that it maintains too close a relationship with the exchange Bitfinex. It has even been accused of manipulating prices to its own advantage.
This latter claim is highly doubtful, and traces mainly to its record of trading to the last quarter of 2017. But cause and response can be difficult to discern through audit trails alone. In this appearance on Boom/Bust, Jeffrey Tucker explains that high a volume is exactly what one would expect in a period with high price increases in the effort to maintain the peg. The creation rate of Tether itself is governed by the companies dollar holdings, so the accusations of possible malfeasance may in fact be baseless.
What Tether is and how the peg works
Tether (ticker USDT) is a stablecoin: a token issued on public blockchains that is meant to trade at exactly one US dollar. The issuer, Tether Limited, creates new tokens when customers wire dollars to it and redeems them when customers send tokens back, so in theory every USDT in circulation is matched by a dollar or dollar-equivalent asset held in reserve. Traders use it as a dollar substitute on exchanges that cannot or will not hold bank accounts, which is why most Bitcoin volume worldwide is quoted in USDT rather than in dollars.
Why the 2018 manipulation claims got traction
The concern in 2018 was structural. Tether and the Bitfinex exchange are controlled by the same group and shared executives, Tether had lost its banking relationships in 2017, and the company had never published an audit. Academic work at the time (Griffin and Shams, “Is Bitcoin Really Un-Tethered?”, June 2018) argued that new Tether issuance clustered around Bitcoin price dips and pushed the price back up. Jeffrey Tucker’s point in the video above still stands as the counter-argument: in a bull market, heavy issuance is exactly what you would expect from an issuer meeting demand for dollar liquidity, and issuance tracking price says nothing about causation on its own.
What regulators found (2021)
The record did not stay ambiguous. On February 23, 2021, the New York Attorney General settled with Tether and Bitfinex for $18.5 million, finding that Tether had lacked banking access from mid-2017, had at times held insufficient reserves while claiming every token was fully backed by dollars, and that Bitfinex had concealed roughly $850 million in losses tied to a payment processor. Both companies were barred from serving New York residents and required to report on their reserves quarterly.
On October 15, 2021, the CFTC ordered Tether to pay a $41 million penalty (and Bitfinex $1.5 million) for making untrue or misleading statements. The CFTC found that Tether held sufficient fiat reserves to back the tokens in circulation on only 27.6 percent of the days in a 26-month sample from 2016 through 2018, and that it had commingled reserves with Bitfinex operating funds. So the 2018 skeptics were right that the “fully backed” claim was false; the manipulation charge, as distinct from the backing charge, was never established by a regulator.
Where Tether stands in 2026
Tether has since become the largest stablecoin by a wide margin and publishes quarterly attestations prepared by BDO. Its Q2 2026 attestation reported about $184.6 billion of USDT in issue, total assets of $187.75 billion against $183.64 billion of liabilities, and a net operating profit of $1.5 billion for the quarter, with the reserves held mostly in US Treasury bills plus gold, Bitcoin, and secured loans. An attestation verifies reported balances on a given date; it is not the full audit that critics have asked for since 2017, and the company’s own filings show the excess-reserve buffer moving by billions from quarter to quarter as gold and Bitcoin holdings are marked to market.
The regulatory backdrop has also changed. The GENIUS Act, signed on July 18, 2025, created the first US federal licensing regime for payment stablecoins, with reserve, redemption, and disclosure requirements that any issuer serving the US market must meet. Whether Tether’s offshore structure ends up inside or outside that regime is the open question for its next chapter. For how we think about stablecoins as an asset class, see Stablecoins in an Unstable World and Bitcoin Becomes a Stablecoin?.
Frequently asked questions
Is Tether fully backed?
Tether publishes quarterly attestations, currently prepared by BDO, that report assets exceeding liabilities. The June 30, 2026 report showed about $187.8 billion of assets against $183.6 billion of liabilities. An attestation confirms balances at a point in time; it is narrower than a full financial audit. Regulators in 2021 found that Tether's earlier claims of full backing were false for long stretches of 2016 to 2018.
What is the difference between Tether and Bitfinex?
Tether issues the USDT stablecoin; Bitfinex is a cryptocurrency exchange. Both are controlled by the same parent group, iFinex, and share executives, which is why regulators treated them together in the 2021 New York settlement.
Why does Tether matter for Bitcoin prices?
USDT is the main dollar substitute on offshore exchanges, so most Bitcoin trading volume is priced in Tether rather than in bank dollars. Any doubt about Tether's backing therefore feeds straight into doubt about crypto market liquidity, which is why the 2018 manipulation claims got so much attention.