In a rather disturbing development, it appears popular stablecoin Tether (USDT) has removed its promises of auditing from its FAQ.
Previously, a passage in the FAQ under the title “Is Tether transparent?” read:
“Yes. Tether’s platform is built to be fully transparent at all times and is regularly audited. Every tether is backed 100% by its original currency.”
Evidence of the original wording can be found on a capture of the original document on web.archive.org from June 28th this year. However, a recent update appears to have removed the text “and is regularly audited“, as can now be seen in the current FAQ:
“Yes. Tether’s platform is built to be fully transparent at all times. Every tether is backed 100% by its original currency.”
The change was brought to light by Reddit user u/Toyake in a post entitled “Tether Quietly Removes Promise Of Audits From FAQ”
Ongoing Controversy
The revelation is particularly disturbing, considering the ongoing investigation from the U.S. Department of Justice (DoJ) into possible manipulation by Tether in last years December bull run. Since the allegations were made by Twitter user @Bitfinex’ed last year, there have been numerous calls for Tether to have its operations properly audited.
Despite having its dollar-backed reserves “confirmed” by the auditing firm Freeh, Sporkin & Sullivan LLP in June this year, the company has been accused of falling short of proving outright that sufficient USD reserves exist. The ability to create Tether tokens and introduce them into the cryptocurrency market, in theory, gives Tether the ability to falsely inflate market value by essentially “printing money”.
In light of the controversy surrounding Tether, it seems particularly questionable that the company would choose to remove its promises of auditing. Surely if proper reserves existed, regular transparent auditing shouldn’t be an issue?
Since Tether operates off-shore, it is not legally bound by U.S law to engage in regular auditing. However, should the DoJ find wrong-doing it could attempt to restrict the purchase of USDT tokens with U.S. currency.
