Stablecoin issuer Tether has responded strongly to a scathing report from a financial research firm that questioned the “legitimacy of Tether’s backing”.

The report, by Hindenburg Research, heavily criticised Tether’s backing and the legitimacy of its reserves, saying that despite “repeated claims of transparency, its disclosures around its holdings have been opaque”.

It also referred to the “multiple regulatory sanctions” Tether has faced over the “alleged lack of truthful disclosure about its reserves”.

Additionally, Hinderburg’s report questioned the nature of Tether’s reserves, saying “much of its backing consists of holdings in commercial paper issued by unnamed counterparties” and that the firm has considerable doubts over its “sparse disclosures”.

To investigate further, Hindenburg’s announced a $1m bounty program for further information on Tether’s backing and to help the firm “advance the public’s knowledge of what we believe could be a growing threat to investors”.

Hindenburg Research’s Nathan Anderson maintained a robust stance on his firm’s view in the report.

“We feel strongly that Tether should fully and thoroughly disclose its holdings to the public,” he said.

“In the absence of that disclosure, we are offering a $1,000,000 bounty to anyone who can provide us exclusive detail on Tether’s supposed reserves.”

The firm concluded its report by saying that it does not hold any open positions on any cryptocurrencies.

Tether responded in kind to the allegations from Hinderburg, calling the announcement and subsequent bounty program “cynical” and a “pathetic bid for attention”.

The strongly-worded response affirmed that the report is an attempt to “discredit not just Tether, but an entire movement” and that the wider crypto community “sees through their opportunism as Bitcoin approaches another all-time high”.

Tether then noted that the report was “not the first time Hindenburg Research has orchestrated an apparent scheme in pursuit of profit” and that it “abhors and denounces their actions and transparent motives”.

Hinderburg is known as a ‘short-selling group’ and is notorious for challenging the claims of many leading public companies including DraftKings and PureCycle.

Tether concluded its response by saying it understood its “role and responsibility” in the industry and it will “continue to focus on our customers’ requirements and defending the crypto markets”.

The report and subsequent response comes a week after Tether agreed to pay a $41m fine to the CTFC over claims it made misleading statements between 2016 and 2019 about having sufficient currency reserves from the estimated $70b tokens in circulation.