Tether (USDT) released on Wednesday a third-party report which concluded that the cryptocurrency is fully backed by USD reserves, dispelling recent allegations that the tokens issued exceed the company’s holdings.
Tether has hired Freeh Sporkin & Sullivan (FSS) — a Washington-based law firm co-founded by former FBI director Louis J. Free — to assure investors that its cryptocurrency is backed by USD. FSS reviewed Tether's bank accounts and found that as of June 1 the company had approximately USD 2.55 billion to cover USD 2.54 billion USDT in circulation. The law firm stressed, however, that it did not perform "the above review and confirmations using generally accepted accounting principles," and that they have not made any conclusions regarding Tether's activity before or after the set date of June 1.
Tether said in a statement on its website: “To address allegations head on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves. Full stop. Memoranda, consulting reports, industry leaders, cryptocurrency pioneers, and competitors have all confirmed this. Reserves have always, and will always, match the number of Tethers in circulation.”
Tether’s Legitimacy Under Scrutiny
This is not the first time Tether has passed an unofficial audit to prove its legitimacy to the cryptocurrency community. Last September, the company released a report conducted by US-based auditor Friedman LLP which also stated that, at the time, Tether's reserves matched the amount of USD in circulation. However, Tether ended its relationship with Friedman before the agency was able to complete a full audit. Shortly after that, reports suggested the US Commodity Futures Trading Commission (CFTC) had subpoenaed Tether and cryptocurrency exchange Bitfinex, which share investors and management.
More recently, a June 13 paper published by researchers at the University of Texas alleged that Bitcoin’s (BTC) spike to USD 20,000 in December 2017 was the result of price manipulation orchestrated by Tether.
Tether acknowledged the scrutiny in its latest transparency update, noting that “much of the speculation and negative reporting” is due to “misunderstandings” about how Tether functions.
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