- The Consumer’s Research report claims Tether lacks transparency.
- Tether fails to submit a full audit of its USD reserves that back the USDT stablecoin.
- Though Tether promised multiple times to produce the audit, it hasn’t been submitted yet.
Consumer advocacy group Consumer’s Research issued a warning to stablecoin issuer Tether in a report released on September 12. The report alleges that Tether lacks transparency around its USD reserves, which are supposed to back its stablecoin, USDT.
The research group argues that Tether has failed to deliver a full audit of its dollar reserves from a reputable accounting firm, despite repeated promises to do so. Consumer’s Research draws a parallel between Tether’s lack of transparency and the situation that led to the collapse of FTX and its sister company Alameda Research.
Read also: Tether and FBI Team Up to Recover $5 Billion in Crypto
Unfulfilled Audit Promises
The Consumer’s Research report highlighted Tether’s history of unfulfilled audit promises dating back to 2017. In 2018, the platform submitted a report from a law firm instead of an accounting firm, claiming that USDT was backed by USD. This led to a probe by the US Department of Justice.
In 2019, the State of New York found that Tether was involved in illegal money movements to cover up an $850 million loss of customer funds. The court ordered the platform to cease operations and fined it $18.5 million in 2021. Tether reportedly settled the charges related to false claims about USDT being backed by USD.
In 2022, the Securities and Exchange Commission filed a case against the law firm that conducted Tether’s audit and claimed USDT was backed by USD. The regulators alleged that the law firm had engaged in improper accounting practices.
As of the recent Consumer’s Research report, Tether has yet to submit a proper audit report. The report also claims that Tether is doing “business with bad actors” and failing to prevent illicit users from using USDT for illegal international transactions.
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