Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner. Tether works to disrupt the conventional financial system via a more modern approach to money. Tether has made headway by giving customers the ability to transact with traditional currencies across the blockchain, without the inherent volatility and complexity typically associated with a digital currency.
Tethers exists on blockchains using the Omni Protocol and as ERC20 tokens. These transport protocols consist of open source software that interface with blockchains to allow for the issuance and redemption of cryptocurrency tokens “tethers”. Tether Platform currencies are 100% backed by actual fiat currency assets in a reserve bank account. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service. The conversion rate is 1 tether USD₮ equals 1 USD.
A blockchain critic has raised questions about the relationship between Bitfinex and Tether, accusing Bitfinex of creating "magic Tethers out of thin air". In September 2017, Tether published a memorandum from a public accounting firm that Tether Limited then said showed that tethers were fully backed by US dollars; however, according to the New York Times, independent attorney Lewis Cohen stated the document, because of the careful way it was phrased, does not prove that the Tether coins are backed by dollars". The documents also fail to ascertain whether the balances in question are otherwise encumbered.". The accounting firm specifically stated that this information is intended solely to assist the management of Tether Limited ... and is not intended to be, and should not be, used or relied upon by any other party.
During the course of a price manipulation investigation by the U.S. Commodity Futures Trading Commission and the United States Department of Justice, Phil Potter, Chief Strategy Officer of Bitfinex and an executive of Tether Limited, departed Bitfinex in 2018. The investigation was continuing on November 20, 2018 and focusing on Tether and Bitfinex, according to Bloomberg.