Tether Promises an Audit in Response to WSJ Criticism

Key Takeaways

The company has did respond to the Wall Street Journal’s claims that it has not been audited.
In lieu of thorough audits, the company publishes periodic attestations or snapshots of its stablecoin reserves.

Despite statements to the contrary, Tether maintains that no other major stablecoin company has been audited.

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Tether plans to conduct an audit in response to Wall Street Journal concerns raised earlier this week.

Tether Prepares an Audit

Tether claims it has not been audited but plans to do so in the future.

Tether issued this comment in reply to a Wall Street Journal article published on August 27, which noted that the company has promised an audit since 2017 but has not yet delivered.

“Everyone is aware that designers have not yet undergone an audit, and they are aware that we are working toward one,” the company stated on August 30.

Tether CTO Paolo Ardoino did not provide a date by which the company could conduct an audit in that article. Instead, he stated, “things are moving more slowly than… we would like.”

In lieu of a comprehensive audit, Tether has published financial snapshots signed by BDO Italia, which Tether claims has “unrestricted access” to company information. It insists that this practice is the “most honest and transparent on the market,” but it has made clear that these snapshots are not audits in the traditional sense.

The company claims that competing stablecoins have falsely claimed to have conducted an audit. This assertion is supported by the WSJ, which states that Tether and other leading stablecoins publish merely attestations, whereas a comprehensive audit would involve testing transactions prior to a specified date.

Tether concurs with the Wall Street Journal that the digital asset industry has no auditing and accounting standards. The document states that it “welcomes these developments.”

Other WSJ Statements Challenged

Tether contested other Wall Street Journal claims and inferences. The company asserts that it is profitable, stating, “It is false to assume that our business is unprofitable.”

Tether responded to claims that its assets exceed its liabilities by $191 million and that a 0.3% decrease in assets would “render it technically insolvent.”

Tether asserted that a margin of difference in reserves is typical in the stablecoin industry and claimed that the WSJ intends to “single out Tether and damage its reputation.” In recent months, Tether was able to easily redeem $16 billion worth of its USDT stablecoin, demonstrating its resilience.

Tether added that its reserves of three months’ worth of treasury bills (T-bills) are a safe asset.

Lastly, the company insists that short-selling USDT is impossible and asserts that this notion stems from a false narrative involving unsuccessful attempts by hedge funds to short the stablecoin.

Tether did not refute other WSJ claims, including that it is the only major stablecoin to use digital tokens in its reserves. Nor did it address the fact that the USDT price dropped to $0.95 during Terra’s demise in May.

Despite having the largest market capitalization among stablecoins, Tether is frequently criticized. The current reminder that a comprehensive audit remains unavailable will likely vindicate skeptics.

The author of this piece owned BTC, ETH, and other cryptocurrencies at the time of publication.