Tether Limited, the rumour-plagued company that issues a “stable coin” cryptocurrency called Tether, has released documentation showing that, on June 1st, company accounts held enough reserves to back the $2.54 billion dollars of tether the company has injected into many corners of the cryptocurrency-trading ecosystem.
Tethers are popular because they can be arbitraged quickly between cryptocurrency exchanges, which often experience problems when trying to off- and onramp fiat transfers from banks
Banks have more than once been accused of trying to suppress the easy flow of fiat into crypto, which they view as a competing industry.
Utility means that tethers are now present on over 30 exchanges globally.
Tether is ‘pegged’ 1-to-1 to the US dollar and its price on crypto exchanges has remained fairly stable in that regard.
Tether Limited claims that every tether created is backed by one US dollar held in Tether Limited accounts, and promises “transparency” in this regard. But the company has never successfully completed an external audit.
Tether limited has also tried to obscure its close ties with the Bitfinex exchange, which this month was accused by academics at the University of Texas to of using tethers pump the price of Bitcoin and other cryptos at key intervals.
On Wednesday June 20th, Tether limited sought to allay doubts that it truly holds
reserves to back the $2.54 billion tethers is has issued by releasing a report from Washington, DC law firm Freeh, Sporkin & Sullivan, LLP (FSS).
The report attests that the firm received “sworn and notarized” balance confirmations from “Tether’s two banks” showing a total balance of $2,545,067,236.82 USD.
The firm also claims to have obtained a sworn statement from the Tether CEO and its Chief Counsel stating, “the amount of fully-backed Tethers in circulation as of June 1, 2018 was equal,” to the amount of tethers circulating.
FSS states that neither the bank nor Tether Limited was given advanced notice of FSS intent to check balances on June 1st.
The report discloses that Judge Eugene R Sullivan, one of the FSS law firm’s founders, sits on the advisory board at one of Tether banks, and helped the, “review to commence in a timely and comprehensive manner, ensuring that no pertinent information was overlooked in the process.”
Noteworthy in all this is the fact that the check was conducted by Tether’s own law firm and not an accounting firm.
Coindesk reporter Marc Hochstein wrote a skillful and comprehensive article about this recent ‘randomized inspection’ of Tether accounts.
He included illuminating comments by CPA, Tom Selling, a former academic fellow in the chief accountant’s office at the Securities and Exchange Commission:
99 percent of the work a law firm does is advocacy for the client… (whereas) 100 percent of the work of an accounting firm is to hold themselves out as independent.
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