Bitfinex, which is the largest exchange in the world, threatened legal action to parties that had accused the exchange of misconduct.

The reason for allegation is quite predictable. Bitfinex issues Tether tokens which are issued for US dollars on a 1:1 ratio. In simple terms, Bitfinex were accused of not having 1:1 reserves of dollars to issued Tether tokens.

The problem is that because one Tether token equals one dollar, it has been used to buy other cryptocurrencies because of its standardized value. This culminated in suggestions that the price of Bitcoin and other cryptocurrencies had been inflated because people had been buying cryptocurrencies with Tether and not actual US dollars. If Bitfinex does not have an equal reserve of dollars to back up the amount of Tether tokens in existence, things could end badly.