Tether clears the air about the questions that were asked about its physical backing of U.S Dollars, by giving full online access to its bank accounts to a legal firm.
Tether which is cryptocurrency’s first and most famous stable coin got the approval of the backing from the legal firm, Freeh, Sporkin and Sullivan LLP (FSS) that there is, in fact, $2.55 billion in their bank accounts.
The cryptocurrency community classified Tether as phony and controversial given its claim of backing each token to a dollar. However, this report will have to make many bite their tongues.
The ‘transparency update’ that was reported by FSS includes a member that’s a former FBI director.
FSS claimed that the review of the accounts was done on June 1st, with no awareness of when it was conducted by the company so that no prior arrangements would be made. The holdings are in two different banks, both being unnamed. However, reports show that one might be Puerto Rico’s Noble Bank.
“As part of the Engagement, FSS was able to confirm the U.S. Dollar (“USD”) balances in accounts owned or controlled by Tether at its banks, including selecting the appropriate confirmation dates, and reporting to Tether as to the results of such inquiries. As per the letter of engagement, FSS selected the dates for balance confirmations without prior notice to or consultation with Tether. FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018, ” FSS Said.
Last week, the University of Texas published a hard-hitting paper reporting USDT which is Tether’s coin to have been used to manipulate Bitcoin’s price in last year’s record-breaking bull run. The University’s paper also stated that USD does not fully back it.
Tether stuck to its word of ensuring that a definite answer will be given soon.
“To address allegations head-on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves. Full stop. Memoranda, consulting reports, industry leaders, cryptocurrency pioneers, and competitors have all confirmed this. Reserves have always, and will always, match the number of Tethers in circulation,” Tether said after the critical paper.
The only drawback to this whole assessment is the fact that it is not a formal audit.
“The bottom line is an audit cannot be obtained. The big four firms are anathema to that level of risk. We’ve gone for what we think is the next best thing,” Stuart Hoegner, Tether’s general counsel, told Bloomberg.
With many accounting firms not ready to perform a formal audit, the critics will have to trust FSS’s report.
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