- Consumers’ Research has launched a report accusing Tether of publishing false transparency reports and engaging with sanctioned actors in the financial space.
- Tether has a history of allegedly false transparency claims, including a 2018 report from a law firm instead of an audit by an accounting firm.
- While Tether is taking steps to improve transparency, the company has never provided an audit by a major accounting firm.
It’s been some time since Tether made headlines about its alleged lack of transparency regarding the company’s US dollar reserves, which supposedly back USDT.
On September 12, the consumer protection group Consumers’ Research released a report expressing concerns over the stablecoin issuer Tether, stating that the issuer has never provided a full audit of these reserves from a reputable accounting firm.
Lack of Transparency
The report included an open letter to state governors, radio advertisements, and a dedicated website outlining the group’s concerns. Some of these stated that Tether had engaged with “questionable entities” and facilitated the use of USDT to bypass international sanctions.
Consumers’ Research compared Tether’s situation to the collapse of FTX and Alameda Research, citing similar transparency issues with the disgraced crypto companies.
Related: SEC Eyes Challenge to FTX’s Stablecoin Repayment Plan, Drawing Industry Backlash
The report highlights the list of allegedly false claims Tether has made throughout history, starting in 2018, when Tether released a report – not an audit – by a law firm, not an accounting firm.
The problem is multifaceted, however. For instance, auditors are often elusive regarding Tether, especially the Big Four (Deloitte, PwC, EY, and KPMG). According to Tether’s CEO, Paolo Ardoino, these auditors are hesitant to engage with the stablecoin issuer because doing so would “harm” their reputations.
In other words, Ardoino argues that Tether is not audited by any major firm because the firms simply don’t want to. So far, Tether only relies on BDO Italia for monthly proof-of-reserves, but these are only attestations and not proper audits, basically a “trust me, bro” type of message to USDT users.
However, Tether seems to be making some efforts to increase transparency, including hiring former Chainalysis chief economist Philip Gradwell to produce USDT usage reports and collaborating with law enforcement to combat illicit activities involving USDT.
Related: Tron, Tether, and TRM Labs Team Up to Fight Crypto Crime on Tron Blockchain
Additionally, Tether announced the creation of a financial crime unit in collaboration with Tron to identify and freeze illicit transactions on the Tron network, further emphasising its commitment to security.
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