USDT tokens are now fully backed by Tether’s reserves, the stablecoin issuer said Thursday, according to Coindesk.

Tether published a response to what it described as “a flawed paper” written by John Griffin, a professor of finance at the University of Texas at Austin, and Amin Shams, an instructor the Ohio State University which claimed a single address on the Bitfinex exchange was responsible for manipulating the bitcoin market in late 2017, sparking the bull market. The paper was an updated version of the first one published in the summer of 2018, Coindesk reported.

Tether has pushed back, stating that the authors of the updated paper released “a watered-down and embarrassing walk-back of its predecessor,” The Block Crypto reported.

Perhaps more intriguing, however, was the claim that “All Tether tokens are fully backed by reserves.”

Whether or not USDT is fully-backed has long been a point of contention. The company has promised an audit of its stablecoin reserves (though it has not delivered one, and has since dissolved its relationship with its auditor), produced a third-party report saying it likely had more funds than outstanding tokens, and had a bank write a letter vouching for its holdings. (The latter two reports both acted as snapshots, only assuring the crypto community that on specific days, Tether’s obligations did not exceed its assets.)

Tether’s backing is even the subject of an inquiry by the New York State Attorney General’s office, according to Coindesk’s report.

Nevertheless, Tether maintained that its tokens were fully backed until April 2019, when general counsel Stuart Hoegner wrote in an affidavit that USDT was backed by “cash and cash equivalents … representing approximately 74% of the current outstanding tethers.”

At the time, Tether held $2.1 billion in assets, with 2.8 billion USDT tokens issued on the Omni blockchain. According to a block explorer, this number has fallen since then to 1.775 billion. However, a further 2 billion USDT is in circulation as an ERC-20 token.

Tether’s “Transparency” page says the company currently holds more than $4.6 billion in total assets, including $4.56 billion in US dollars, $44 million in euros and $3.3 million in Chinese renminbi (amounts are converted).

In an email to Coindesk, Hoegner said the outstanding tokens are currently backed by reserves, adding:

“According to the website and our terms of service, our reserves include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties. The 74% figure refers to particular assets at that point in time, not the aggregate reserves.”

He declined to detail the breakdown between Tether’s actual cash holdings and the cash equivalents, saying, “We generally do not share the asset mix.”

As for the actual paper that Griffin and Shams hope to see published in the Journal of Finance, Tether’s statement Thursday said “the authors demonstrate a fundamental lack of understanding of the cryptocurrency marketplace and the demand that drives Tether token purchases.”

The paper itself said its analysis “for the single largest player on Bitfinex” found that “the 1%, 5% and 10% of hours with the highest lagged flow of Tether by this one player are associated with 55%, 67.2% and 79.2% of bitcoin’s price increase over our March 1, 2017 to March 31, 2018 sample period.”

Other scandals involving Bitfinex and Tether

At the beginning of October, a law firm in New York filed a class-action lawsuit against Tether and Bitfinex, accusing the pair of using USDT to manipulate the crypto market, Cointelegraph reported.

In April this year, New York Attorney General Letitia James announced that Bitfinex and Tether were being investigated for fraud. It was alleged that the executives “engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds,” Newsweek reported.