Tether’s Crypto Tokens Allegedly Entirely Backed by USD Funds “Despite Speculation”
There has been many reports and gossip in the crypto world about the validity of the Tether platform since their auditor left. The main claim that multiple news outlets have reported is that the company is issuing more tokens than it has the funds for. Essentially, they are being unofficially accused of printing money.
Up until recently, Tether has been unable to prove definitively that this isn’t the case. However, they are finally speaking up with a newly published update on their official website.
In the FSS report, they start off by acknowledging that there’s been much “scrutiny” over their brand and how they’ve ignored the accusations. They believe that the reason for the problem is the “misunderstanding of how Tether functions.”
The first issue that they address is the main question that they’ve been asked – Are the Tether tokens in circulation covered by USD reserves? The answer to this question is yes, according to the report. They state that many sources have confirmed this answer through “industry leaders, cryptocurrency pioneers, and competitors.”
To support their claims, Tether refers to an engagement with Freeh, Sporkin & Sullivan LLP (FSS) to take a look at their bank account information, along with an inspection of the Tethers available. This law firm is known for their investigations worldwide, and was developed by three former judges, one of which has a history of employment with the FBI.
Despite the claims by Tether’s website that they were allowed to inspect their data, this was far from an audit. In fact, they only had access to the amount of funds that the company held on June 1st, which was a dated selected by FSS for a random review.
In Tether’s update, they stated that FSS received access to the following information, upon request:
- Tether’s anti-money laundering (“AML”), Bank Secrecy Act, and Office of Foreign Assets Control Program
- Tether’s AML/Anti-Terrorist Financing Risk Advisory Report from 2018
- Extensive documentation on Tether’s account registration process and procedures and its AML system and compliance policies
- An unredacted consulting report issued by a professional services firm retained by Tether
- Complete account opening paperwork and materials concerning Tether’s accounts with its banks
- Tether’s banking policy, banking access policy, and internal controls, including as they relate to the issuance of new Tethers
- Financial information related to Tether
- Tether’s registration as a money services business with and under the Financial Crimes Enforcement Network
- Documentation and materials with respect to Tether’s personnel and its corporate structure
- Materials concerning the number of issued and outstanding Tethers, both historically and currently
During this engagement, FSS was supposed to check if the number of tokens matched the amount of USD currency, which was validated. However, the fact that one of FSS’s current partners is on the advisory board for Tether leads some sources to believe that the connection could sway the limited investigation. According to the report:
“FSS is not an accounting firm and did not perform the above review and confirmations using Generally Accepted Accounting Principles. FSS has not performed any procedures or made any conclusions for activity prior to or subsequent to June 1st, 2018, Close of Business.”
This report can be viewed at here.
Even with this update, it seems that there are many users still believe that they are creating tokens without any financial backing. As a result, it is possible that Tether will see a loss fairly soon, but only time will tell if they have the trust of their followers, and if they can earn the trust of the rest of their target audience.
If anyone still wants to learn other details about Tether or their platform, they can visit tether.to.
Here is some of the latest discussions on reddit and twitter:
Just because a document shows a certain bank balance amount on a certain date doesn't mean the funds are unencumbered/free and clear.
An audit, which Tether refuses to provide, and which companies large and small undertake on a regular basis, would answer that question. pic.twitter.com/53y4cRmVAC
— Preston Byrne (@prestonjbyrne) June 20, 2018
You realize this is just Tether's lawyer saying that they have the money. That's worth about as much as the paper tether is printed on – non-existent just like an audit of Tether is non-existent
— Bitboy Cryptopolous (@crypdiot) June 20, 2018
How about a real audit and not just a press release from your lawyers?
— Bitboy Cryptopolous (@crypdiot) June 20, 2018
Tether had a chance to prove all its naysayers wrong, and they laid a fucking egg: "Here's a letter from a law firm saying they saw some documents we won't show you from a couple of banks who we won't name"
They promised an audit years ago, and this is what they come up with?
— Stephen Murray (@spmurrayzzz) June 20, 2018
See, the FUDsters will never be satisfied. Tether provides solid evidence of full reserve for USDT but that is not enough, even a full audit would not be enough. This crusade against Tether was never about principle for these people. https://t.co/6TeaZvharv
— Whalepool (@whalepool) June 20, 2018
Im with you on the big picture. I think big money knows the Tether "report" was meaningless. The snapshot was done on one day and their reasonings for not being able to ever do a full audit are rather lame.
— matthewthomasdailey (@mtdly_) June 20, 2018