Dollar

Consumers’ Research, a prominent consumer protection group, raised serious concerns over the stablecoin issuer Tether regarding its transparency and reserve backing of USDT.&nbsp;
The group published a&nbsp;<a style="text-decoration:none" href="https://tetherwarning.com/wp-content/uploads/2024/09/Letter-to-Governors-on-Tether-1.pdf" rel="noopener noreferrer nofollow">report</a> on September 12, accusing Tether of failing to provide a full audit of its U.S. dollar reserves, which allegedly backed the stablecoin on a 1:1 basis.&nbsp;
<h2 dir="ltr" id="span-span-lack-of-independent-audit-raises-concerns-span-span">Lack of Independent Audit Raises Concerns</h2>
Tether, the issuer behind the world’s largest stablecoin USDT, has long claimed that its tokens are fully backed by reserves, predominantly in U.S. dollars.&nbsp;
&nbsp;
However, according to Consumers’ Research, Tether has yet to provide an independent audit from a reputable accounting firm to verify these claims. The organization points out that the company has only released “attestations,” which are less thorough than full audits.
&nbsp;
Will Hild, executive director of Consumers’ Research,&nbsp;<a style="text-decoration:none" href="https://www.foxbusiness.com/politics/new-cryptocurrencys-maker-has-history-false-claims-deliberate-lack-transparency-watchdog-warns" rel="noopener noreferrer nofollow">told</a> Fox Business that Tether’s failure to deliver on years-long promises of a proper audit leaves consumers exposed to significant risk.&nbsp;
<blockquote>
 “Until a credible third-party auditor can verify their claims of 1:1 U.S. dollar backing, consumers should be cautious about investing their money with them,” said Hild.
</blockquote>
<h2 dir="ltr" id="span-span-questionable-practices-and-comparisons-to-ftx-span-span">Questionable Practices and Comparisons to FTX</h2>
The report compares Tether’s situation to the now-defunct FTX and Alameda Research, both of which collapsed due to poor financial controls and lack of transparency.&nbsp;
&nbsp;
Consumers’ Research believes that similar risks exist with Tether, especially given its alleged involvement with questionable entities and its use of USDT to circumvent international sanctions.
&nbsp;
In its open letter to state governors, the group calls on policymakers to take immediate action to protect consumers from potential financial harm linked to Tether. The report also launched a radio ad campaign and a dedicated website, TetherWarning.com, to further highlight the risks.
<h2 dir="ltr" id="span-span-sec-and-jpmorgan-s-concerns-echo-transparency-worries-span-span">SEC and JPMorgan’s Concerns Echo Transparency Worries</h2>
The Wall Street Journal recently&nbsp;<a style="text-decoration:none" href="https://www.wsj.com/finance/currencies/tether-crypto-us-dollar-sanctions-52f85459" rel="noopener noreferrer nofollow">reported</a> that Tether operates in a parallel economy outside U.S. law enforcement oversight. The report highlighted the potential dangers of such an unregulated ecosystem, noting that Tether’s operations could undermine efforts to combat illicit activities such as arms trading and sanctions evasion.
&nbsp;
Additionally, last February, JPMorgan Chase&nbsp;<a style="text-decoration:none" href="https://www.bloomberg.com/news/articles/2024-02-01/stablecoin-tether-s-usdt-market-dominance-may-jeopardize-crypto-jpmorgan-says?srnd=premium" rel="noopener noreferrer nofollow">raised</a> concerns about Tether’s compliance with regulations. The financial giant flagged the company’s lack of transparency as a potential threat to the overall stability of the crypto market, citing its dominance in stablecoin trading.
<h2 dir="ltr" id="span-span-tether-s-efforts-to-increase-transparency-span-span">Tether’s Efforts to Increase Transparency</h2>
Tether has taken steps to improve its transparency. In January, Howard Lutnick, CEO of Cantor Fitzgerald, a firm managing Tether’s U.S. securities portfolio,&nbsp;<a style="text-decoration:none" href="https://www.bloomberg.com/news/videos/2024-01-16/lutnick-the-fed-is-staying-higher-for-longer-video" rel="noopener noreferrer nofollow">assured</a> that Tether had sufficient reserves.&nbsp;
&nbsp;
Lutnick stated, “From what we’ve seen, they have the money they say they have.”
&nbsp;
Moreover, Tether&nbsp;<a style="text-decoration:none" href="https://x.com/paoloardoino/status/1812846812429983880" rel="noopener noreferrer nofollow">hired</a> Philip Gradwell, a former economist at Chainalysis, to produce reports on USDT usage. These reports are intended to offer more clarity to both investors and regulators on how USDT is used across global markets.
&nbsp;
Tether has also been active in combating illicit activity involving its stablecoin. According to CEO&nbsp;<a style="text-decoration:none" href="https://tether.io/news/tether-proactively-assists-u-s-doj-in-criminal-investigation-and-victim-recovery/" rel="noopener noreferrer nofollow">Paolo Ardoino</a>, Tether has assisted law enforcement agencies in recovering over $100 million in USDT tied to illegal activities since 2014.&nbsp;
&nbsp;
In a further bid to increase compliance, Tether recently&nbsp;<a style="text-decoration:none" href="https://www.forbes.com/sites/digital-assets/2024/09/10/tether-tron-and-trm-labs-join-forces-to-combat-crypto-crime/" rel="noopener noreferrer nofollow">announced</a> a partnership with Tron to establish the "T3 Financial Crime Unit," which aims to track and freeze illicit USDT transactions.

Tether Faces Transparency Issues with its US Dollar Reserves: Report

Table of Contents

BSCN

Other articles published on Sep 16, 2024

Coinpedia Fintech News

Succinct Labs and OP Labs Team Up to Launch New Zero-Knowledge Proof Solution

Binance Keeps the Listing News Coming: Three New Altcoin Trading Pairs Listed!

FBI Finds Crypto Fraud Losses Hit $5.6B in 2023, Up 45% from 2022

Circle and Sony Block Solutions Labs Partner to Boost USDC Adoption on Soneium

Angel Drainer Resurfaces: New Phishing Toolkit AngelX Deploys 300+ Malicious dApps

Join our free newsletter for daily crypto updates!