- Tether‘s solvency has been questioned for years.
- The company has so far yet to do a full audit.
- Tether’s CEO welcomes a Big Four audit.
Leading stablecoin issuer Tether has long faced scrutiny over the transparency of its reserves. While the company insists that its USDT token is fully backed one-to-one by reserves, it has yet to undergo a full audit, leaving doubts unresolved.
As part of its image overhaul, Tether CEO Paolo Ardoino signaled openness to a Big Four audit, which, if it goes through, could decisively end lingering doubts about the company’s solvency.
Tether Boss Is All for a Full Audit, But….
To reshape Tether’s image, Ardoino told Fox Business that the company is deepening its collaboration with law enforcement to combat crypto crime, investing in emerging technologies like AI, and considering a Big Four audit to boost transparency.
Sponsored
However, Ardoino acknowledged that securing an accounting firm for a full audit could be challenging due to US regulatory hostility. He specifically pointed to rules making it difficult for audit firms to take on crypto clients, especially those outside the US.
Despite these hurdles, Ardoino expressed hope that the regulatory landscape will improve after the upcoming US elections, potentially easing restrictions and making a full audit more feasible.
Tether’s push for transparency followed a 2021 NYAG investigation that revealed the company’s claims of one-to-one dollar backing were false. The probe found that Tether was shifting funds between its parent company, Bitfinex, to cover losses and commingling user funds.
Since then, Tether has relied on accounting firm BDO for quarterly attestations, with the latest report showing a $11.893 billion surplus in assets over liabilities.
Are Attestations Enough?
Tether’s quarterly attestations are a welcome development, but it is important to note that attestations are limited, point-in-time reviews of specific financial data, such as reserves, and are not an evaluation of the complete financial records.
In contrast, audits are far more comprehensive. They provide an in-depth evaluation of a company’s entire financial statements and internal controls over a longer period, offering greater assurance to investors and regulators.
CPA Blake Oliver stated that none of the Big Four accounting firms are willing to audit Tether, citing reputational risks. He added that if Tether’s books were truly sound, appointing one of these firms for a full audit should not be an issue.
On the Flipside
- Accounting fraud scandals, such as Enron and Lehman Brothers, show that audits do not guarantee against financial misstatements.
- BDO is ranked the fifth largest accounting firm by revenue.
- Ongoing red flags have not hindered Tether‘s growth.
- Audits follow Generally Acceptable Auditing Standards, which are universal regardless of appointing a Big Four firm.
Why This Matters
If Tether follows through with a full audit, it will either silence years of skepticism and usher in a new era of crypto transparency or confirm the industry’s worst fears.
Tether celebrates ten years of USDT.
Tether’s USDT Marks 10th Anniversary with Documentary Launch
HBO’s mistaken Satoshi reveal still helped Bitcoin.
HBO Got Satoshi Wrong: Here Are 3 Reasons Why Bitcoin Still Won
