Tether Promises Audit Following WSJ Criticism
Despite promising an audit since 2017, Tether has not subjected itself to one.
- Tether has responded to claims from The Wall Street Journal alleging that the firm has not been audited.
- The firm publishes regular attestations or snapshots of its stablecoin reserves instead of thorough audits.
- Tether insists that no other major stablecoin firm has been audited, despite statements to the contrary.
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Tether says it intends to perform an audit following concerns raised by The Wall Street Journal earlier this week.
Tether Is Planning an Audit
Tether says it hasn’t been audited but plans to do so.
Tether published that statement in response to an August 27 article from The Wall Street Journal, which noted that the firm has promised an audit since 2017 but has not delivered.
“Everyone knows that we have not had an audit and they know we are working towards one,” the firm said on August 30.
In that article, Tether CTO Paolo Ardoino did not provide a date by which the firm could carry out an audit. Rather, he said that “things are going slower than… we would like.”
In lieu of a full audit, Tether has published financial snapshots that are signed off by BDO Italia, which Tether says has “unrestricted access” to company information. It insists that this practice is the “most honest and transparent in the market,” but it has clarified that these snapshots are not proper audits.
The firm says that competing stablecoins, by contrast, have falsely claimed to have carried out an audit. That claim is supported by the WSJ, which says that Tether and other leading stablecoins publish mere attestations, while a thorough audit would involve testing transactions before a specified date.
In line with The Wall Street Journal‘s claims, Tether admits that the digital asset industry has no standard for auditing and accounting. It says that it “welcome[s] these developments.”
Other Claims Contested
Tether contested other claims and implications from The Wall Street Journal. The company insists it is profitable, writing: “to assume that our business is unprofitable is false.”
Tether addressed the claim that its assets outweigh liabilities by $191 million, along with the claim that a 0.3% decline in assets would “render [it] technically insolvent.”
Tether insisted that a margin of difference in reserves is common throughout the stablecoin industry and said that The Wall Street Journal intends to “single out Tether and hurt its reputation.” Tether affirmed that it was able to easily redeem $16 billion of its USDT stablecoin in recent months, demonstrating its resilience.
Tether added that three months’ worth of treasury bills (T-bills), which comprise part of its reserves, constitute a safe asset.
Finally, the firm insists that short-selling USDT is impossible and says that this idea results from a false narrative around hedge funds that have tried to short the stablecoin without success.
The stablecoin issuer did not counter other claims by The Wall Street Journal, such as the claim that it is the only major stablecoin using digital tokens in its reserves. Nor did it address the fact that the price of USDT fell to $0.95 during Terra’s collapse in May.
Despite being the largest stablecoin by market cap, Tether is frequently criticized. Today’s reminder that a full audit is still unavailable will likely vindicate skeptics.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.