The consumer advocacy group Consumers' Research has recently raised concerns about Tether, the issuer of the USDT stablecoin. The main reason for concern is the lack of a proper audit of the company's USD reserves.
History of Unfulfilled Promises
Since its inception, Tether has repeatedly promised audits of its USD reserves but has not fulfilled this promise. Since 2017, the company has consistently asserted conducting audits but has failed to provide compelling evidence of full USD backing.
Legal Investigations
In 2018, Tether presented a report from a law firm, not an accounting firm, stating that each USDT was fully backed by USD. This drew attention from the U.S. Department of Justice, launching an investigation into potential market manipulation by Tether and Bitfinex.
Consequences and Outcomes
In 2021, Tether settled the case by paying New York $18.5 million. In 2022, the SEC (U.S. Securities and Exchange Commission) found that Tether's auditors made errors in accounting reports, exacerbating the issue. The SEC noted that Tether's statements about its reserves were misleading.
The transparency and reliability of Tether remain in question. The consumer advocacy group calls for stricter oversight of the company's operations.
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