Tether Hires Former FBI Director Louis Freeh’s Firm Amid FTC Subpoena
Tether, a Hong Kong-based cryptocurrency company has received a great deal of scrutiny this past year. The platform’s digital token, also called Tether, was poised to be a 1-to-1 replacement for the U.S. dollar in stablecoin form. The currency meant to provide a safer store of value and although it has met this expectation, it has also caused the price of Tether to remain at $1 forever. The greatest fluctuation in price has been give or take 80 cents.
In an attempt to improve the image of its currency, Tether claimed that all of its coins are supported by the dollar and that the funds are held in reserve. However, regulators have been skeptical of the claims.
Six months ago, the Commodity Future and Trade Commission subpoenaed Tether and exchange platform Bitifnex after the latter starting offering Tether on its exchange. Interestingly enough, even though the latter claims that the companies are separate entities, both platforms hare the same CEO – Jan Ludovicus. Accordingly, media outlets have questioned the relationship between the two amid the subpoena.
In an attempt to mitigate the situation and to appropriately deal with the subpoena, Tether hired Freeh, Sporkin & Sulivan (FSS), a Washington D.C. law firm affiliated with Louis Freeh, a former FBI director. Tether commented about the hire, stating that:
Tether and related parties have been the subject of scrutiny over the course of the past several months . . . It is our belief that much of the speculation and negative reporting has been the result of misunderstandings of how Tether functions. TO address allegations head on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves . . . Earlier this year Tether engaged Freeh, Sporkin & Sullivan LLP (FSS) to review bank account documentation and to perform a randomized inspection of the number of Tethers in circulation and the corresponding currency reserves.
Tether charged the firm with conducting an investigation of its compliance and transparency, including a review of its bank balance. Upon completing the task, the firm publicly posted, with Tether’s consent, a report of its findings.
The report shows that Tether has the dollars to back its coin. The report also identified the means of the investigation, indicating that the firm took an “account snapshot” at random and without disclosing its intent to Tether or the banks holding the funds. Essentially, at the time of the investigation, Tether held $2.545 billion, enough to cover the 2538 billion tether coins in circulation.
Even though the firm is recognized for it involvement in large-scale projects, such as investigations into Penn State University, FIFA, and Daimler Chrysler, there are still skeptics around.
In an interview with Yahoo Finance, Freeh discussed the Tether investigation, one of his first crypto-related projects, and noted that his firm expects to be involved in more crypto jobs and is working to develop the staff for them.