Tether releases a transparency update, providing a report by a law firm FSS that states on June 1 the USD reserves have been equal to the tokens but the report has some caveats.
Tether offers clarification
There has always been a lot of speculation around whether every Tether is really backed by 1 USD. Now, Tether has released a transparency update provided by the law firm Freeh Sporkin & Sullivan LLP (FSS). However, the firm hasn’t conducted an official audit rather have been based on the data the firm had from having access to the relevant banks. FSS is a Washington-based law firm that has been established by three former federal judges that also includes a former Director of the FBI. The firm clarifies,
“confirmation of bank and tether balances should not be construed as the results of an audit and were not conducted in accordance with Generally Accepted Auditing Standards.”
Lately, these speculations have been further rising due to a recently released study. The company opens its report by addressing the concern with, “whilst we recognise our own lack of engagement with the greater community, it is our belief that much of the speculation and negative reporting has been the result of misunderstandings of how Tether functions.”
“All Tethers in circulation are fully backed by USD reserves. Full stop.” states the company before adding, “Reserves have always, and will always, match the number of Tethers in circulation.”
But not without some caveats
According to the report, the USD reserves have been $2,545,067,236.82 USD in two separate banks provided by the authorized personnel and confirmed by the respective banks. However, the amount certified to FSS by the company was $2,538,090,823.52 on June 1, 2018, that has been the same as the number of tokens. The amount confirmed by the banks surely extends the tokens but the report doesn’t provide any more information on that.
The update further states the compliance system used by the company,
“All issued, redeemed, and existing Tethers, including all transactional histories, are publicly auditable by means of the tools provided at Omnichest.info and Etherscan.io.”
Documents reviewed by FSS included financial information, AML advisory report, registration process, paperwork related to accounting opening with banks, banking policies followed with the issuance of new Tethers, personal info and material related to issued and outstanding number of Tethers.
Bloomberg reported Tether’s general counsel, Stu Hoegner stating, “The bottom line is an audit cannot be obtained.” He further talked about how the barriers to getting audit are much bigger and hard to overcome at this point in the crypto market in general. Tether might have updated about the transparency, however, it has its shortcomings such as the report is provided by a law firm and not an audit company and the US reserves in the banks have been more than the tokens at one point.
What are your views on findings by FSS? Share your thoughts with us!