The supply of Tether (USDT) has increased by 43% in November alone, with the total market cap surging from $15 million in January 2017 to $646 million at the time of this writing. Given that each tether in circulation is supposed to be backed 1:1 by a reserve of USD held by its parent company, suspicions about the legitimacy of the dramatic increase in supply are beginning to circulate in the crypto community.

Tether has not revealed which banking institutions are providing financial services to the company since April 2017, when international wires to Tether were blocked by the Taiwanese banks they were working with. A reddit user has offered a bounty to anyone who can show which banks are involved with Tether.

Why is this a problem? Tether has never released a full audit proving that they are actually fulfilling the requirement of holding 1 USD for each tether in circulation, which could have serious implications for the bitcoin market. If Tether cannot actually back up each USDT with 1 USD, that effectively means that all the tethers that are not accounted for in this way represent false demand and are thus artificially inflating the price of bitcoin. Unfortunately, reports of price spikes sparked by Bitfinex trading occurring simultaneously with the release of new tethers seem to be pointing in that direction.