Lawyers deny rumors of Tether conspiracy

Not long ago, critics questioned the size of Tether's dollar reserves, causing it to become the subject of close attention in the crypto community.

On June 20, 2018, Tether published an update to its transparency policy on the company's official website. According to the document, a certain law firm confirmed that as of June 1, “the company’s unspent assets exceed the balance of Tether coins equivalent to the US dollar.”

A rocky path

As a cryptocurrency “pegged” to the dollar, the Tether project many seems dubious. It was even called a “time bomb” after Bitfinex was caught creating USDT (Tether dollar) without the required reserves of US dollars.

Meanwhile, two researchers from the University of Texas at Austin said they found potential evidence of price manipulation in Bitcoin and some altcoins caused by Tether coins flooding the market. 

An article published on June 13 under the title “Is Bitcoin Really Un-Tethered” states that an analysis of Blockchain network data found that “purchases using Tether were made when prices in the market fell, after which the price of Bitcoin began to rise significantly.”

After examining the criticism, the Tether team said that in their opinion “most of the speculation and negativity” is explained by insufficient understanding of the mechanism of operation of Tether.

No violations were found

According to the information in the update, Tether resorted to the services of Freeh, Sporkin & Sullivan LLP (FSS) to check bank accountsand random inspection of Tether coins in circulation, as well as their corresponding US dollar reserves. In its report, FSS emphasized that the dates for the balance reconciliation were chosen without the knowledge of Tether.

The statement reads: “FSS has no doubt that, as of June 1, 2018, the company's unspent assets exceed the balance of Tether coins equivalent to the US dollar

However, according to the same FSS report, their financial audit was not carried out according to generally accepted standards because the company is not an accounting firm.

FSS is a Washington, D.C.-based law firm chartered by three federal judges. One of its creators, Eugene R. Sullivan, currently serves on the advisory board of one of the Tether banks.. In its report, FSS emphasizes that this circumstance, in particular, made it possible to complete a comprehensive audit of Tether in a timely manner.

Along with checking bank records, FSS also conducted telephone interviews and in-person checks of employees of Tether and its banks. They also scrutinized the Anti-Money Laundering and Counter-Terrorism Financing report, Tether's bank account materials, documents related to personnel and corporate structure, as well as data on the number of Tether coins minted and minted, and several other documents.

At the end of the published update, Tether states that company transparency measures will still be taken, however, they hope that the FSS report will “help resolve the issues.” The company also assured that it will take additional steps aimed at making Tether more open to the general public and eliminating any arising uncertainties.