September 12, 2024 Consumers Research, the nation’s oldest consumer advocacy organization, issues a public statement to U.S. governors regarding alleged risks associated with fiat-backed stablecoin issuer Tether (USDT) issued a warning.
Consumers’ Research is a nonprofit organization (NPO) focused on educating consumers about a variety of issues affecting products, services, and markets. Founded in 1929, the site was created to provide unbiased, accurate information to help people make informed decisions about the products they buy. Over time, the organization has expanded its mission to include promoting consumer protection, exposing deceptive business practices, and advocating for market transparency.
Consumers’ Research participates in public awareness campaigns, conducts research, and produces reports aimed at informing consumers about issues that affect their daily lives, from finance to privacy concerns. This often happens. Their work is independent of government and corporate influence, allowing them to focus on providing consumers with clear and honest information.
Tether, which operates a stablecoin that claims to be 1:1 backed by the U.S. dollar, has not verified this claim through an independent audit, despite years of promises to do so, according to Consumers’ Research. I couldn’t.
The group expressed concern that Tether’s alleged failure to conduct reliable audits on an ongoing basis could expose consumers to financial risks. Consumers’ Research claims no such audit has taken place, despite assurances from Tether’s management, including the CEO’s statement in 2022 that the audit would be completed “within a few months.” . The group warns that this lack of transparency could have serious implications for consumers who rely on the company’s dollar-backed claims.
Additionally, the nonprofit said Tether has engaged in questionable conduct in the past. They point to a 2019 investigation in which New York authorities found that Tether allegedly moved hundreds of millions of dollars to cover an $850 million shortfall in customer funds. Furthermore, Consumers Research suggests that it believes Tether’s situation has similarities to other failed crypto companies such as FTX and Celsius, potentially resulting in financial losses for consumers. I am doing it.
The group also expressed concern about Tether’s alleged ties to sanctioned entities. According to Consumers’ Research, Tether was involved in transactions with Galantex, a Russian cryptocurrency exchange that was sanctioned by the US Treasury in 2022. The group also claims that Tether continues to process transactions through Bitpapa, another exchange that was allegedly sanctioned. Support Russia’s war effort against Ukraine.
In light of these serious allegations, Consumers Research is calling on U.S. governors to assess the availability of Tether to consumers in their states and take steps to protect their citizens from potential economic harm. There is.
Contrary to the concerns raised by Consumers’ Research, Tether Holdings Limited has released its second quarter 2024 independent auditor’s report conducted by BDO Italia, an independent third-party accounting firm. According to the report, as of June 30, 2024, Tether’s assets exceeded its liabilities by $5.33 billion. The audit covered Tether’s consolidated financial and reserves report, showing that the company’s stablecoin, USDT, accounts for cash, U.S. Treasury securities, precious metals, Bitcoin, and other investments.
BDO Italia’s auditors conducted a series of rigorous tests, including bank statement verification and balance reconciliation, to confirm the existence of assets reported by Tether. The audit also included sampling to ensure that secured loans were properly secured. This independent review ensures that Tether’s issued tokens, including USDT, are backed by corresponding reserves, alleviating some of the concerns surrounding transparency.
BDO Italy’s report highlights that reserves exceed the debt of companies issuing Tether tokens by more than $5.33 billion. Additionally, Tether’s management applies IFRS 9 Accounting Standards to value its assets, ensuring that assets are recorded at fair value, including investments in precious metals and intangible digital assets.
Tether has made significant progress in recent months in an effort to address concerns about transparency and illegal activity. According to a Decrypt report published today in July 2024, Tether has hired former Chainalysis chief economist Philip Gladwell to produce a report on USDT usage for US regulators and investors. hired. The move is part of Tether’s broader efforts to increase transparency and accountability, particularly in response to increased regulatory scrutiny of the cryptocurrency industry.
Additionally, the Decrypt report highlighted Tether’s cooperation with law enforcement. CEO Paolo Ardoino said the company has assisted more than 145 law enforcement agencies since 2014 and recovered $108.8 million in USDT related to illegal activities. Tether has also partnered with TRM Labs and Tron to establish the T3 Financial Crimes Unit, dedicated to identifying and freezing illicit USDT transactions on the Tron network.
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