Beginning with a whitepaper published online in January 2012, J.R. Willett described the possibility of building new currencies on top of the Bitcoin Protocol. Willett went on to help implement this idea in the cryptocurrency Mastercoin, which had an associated Mastercoin Foundation (later renamed the Omni Foundation) to promote the use of this new “second layer”. The Mastercoin protocol would become the technological foundation of the Tether cryptocurrency, and one of the original members of Mastercoin Foundation, Brock Pierce, would become a co-founder of Tether. Another Tether founder, Craig Sellars, was the CTO of the Mastercoin Foundation.
The precursor to Tether, originally named “Realcoin”, was announced in July 2014 by co-founders Brock Pierce, Reeve Collins, and Craig Sellars as a Santa Monica based startup. The first tokens were issued on Oct 6, 2014, on the Bitcoin blockchain. This was done by using the Omni Layer Protocol. On 20 November 2014, Tether CEO Reeve Collins announced the project was being renamed to “Tether”. The company also announced it was entering private beta, which supported a “Tether+ token” for three currencies: USTether (US+) for United States Dollars, EuroTether (EU+) for Euros and YenTether (JP+) for Japanese yen. Tether said “Every Tether+ token is backed 100% by its original currency, and can be redeemed at any time with no exposure to exchange risk.” The company's website states that it is incorporated in Hong Kong with offices in Switzerland, without giving details.
In January 2015, the cryptocurrency exchange Bitfinex enabled trading of Tether on their platform. While representatives from Tether and Bitfinex say that the two are separate, the Paradise Papers leaks in November 2017 named Bitfinex officials Philip Potter and Giancarlo Devasini as responsible for setting up Tether Holdings Limited in the British Virgin Islands in 2014. A spokesperson for Bitfinex and Tether has said that the CEO of both firms is Jan Ludovicus van der Velde.
According to Tether's website, the Hong Kong based Tether Limited is a fully owned subsidiary of Tether Holdings Limited. Bitfinex is one of the largest Bitcoin exchanges by volume in the world.
For a while, Tether was processing US dollar transactions through Taiwanese banks which, in turn, sent the money through the bank Wells Fargo to allow the funds to move outside Taiwan. Tether announced that on April 18, 2017, these international transfers had been blocked. Along with Bitfinex, Tether filed suit against Wells Fargo in the U.S. District Court for the Northern District of California. The lawsuit was withdrawn a week later.
In June 2017, the Omni foundation and Charlie Lee announced that Tether would soon be issued on the Omni layer of Litecoin. In September 2017, Tether announced they would be launching additional ERC-20 tokens for United States Dollars and Euros on the Ethereum blockchain. Tether later confirmed the Ethereum tokens were issued. Currently, there are a total of four distinct Tether tokens: United States Dollar Tether on Bitcoin's Omni layer, Euro Tether on Bitcoin's Omni layer, United States Dollar Tether as an ERC-20 token, and Euro Tether as an ERC-20 token.
From January 2017 to September 2018, the amount of tethers outstanding grew from about $10 million to about $2.8 billion. In early 2018 Tether accounted for about 10% of the trading volume of bitcoin, but during the summer of 2018 it accounted for up to 80% of bitcoin volume. As of June 2018, Tether was the tenth largest cryptocurrency.
Research suggests that a price manipulation scheme involving tether accounted for about half of the price increase in bitcoin in late 2017.More than $500 million Tethers were issued in August 2018.wikipedia
On October 15, 2018 the tether price briefly fell to $0.88 due to the perceived credit risk as traders on Bitfinex exchanged tether for bitcoin, driving up the price of bitcoin.
Tether Limited has not substantiated their claim of full-backing through a promised audit of their currency reserves.