Tether is a cryptocurrency whose value is pegged to the U.S. dollar. They claim to have enough U.S. dollars to back up all of the Tether outstanding, but do they really have $2,217,140,814.00 in the bank?
According to Tether Limited (USDT), Tether is a digital token that is backed by the U.S. Dollar. They claim that each token is backed 100% by fiat currency in Tether Limited’s bank accounts. On September 28th, 2017 Tether posted its “transparency” documents, publicly posting an audit done by Friedman LLP (“FLLP”) of their bank accounts. As of September 15th, 2017, FLLP loosely states that Tethers accounts have a total of $442,984,592.00. FLLP goes on to say that it has not evaluated the terms of the bank accounts and makes no representations about Tethers ability to access the funds or whether the funds are committed for purposes other than Tether token redemptions. There are too many caveats in this audit to trust it fully.
In their website, Tether claims that there will be “frequent, professional audits”, so why hasn’t one been performed in over 3 months? The reason this is so alarming is because Tether has issued over $1.7 billion worth of new tokens since the last audit. There are a lot of people out there holding billions Tether on exchanges, using it the same way they would fiat USD so it would be devastating if they were to learn that it did not have the $2.2 billion to back the USDT tokens. On January 27th, 2018 Tether admitted to Coindesk that its relationship with Friedman LLP, (the accounting firm that performed the September 15th audit), has ended.
It has now been over 5 months since the last audit with no concrete answer as to when a new one will be completed. Hopefully Fort Knox still has enough pure gold in it to back all of the USD outstanding as well but we may never know.
It is clear that the planned “frequent professional audits”, are not going to come easy. Does Tether have something to hide? Where did they get the $850 million in January alone to issue that many new tokens? Is there more to the dissolved relationship with Friedman LLP than meets the eye?
Maybe Tether has $2.2 billion stashed away somewhere and they are just having difficulty finding an accounting firm to work with on a steady basis. For now, we can only guess as we wait for an updated professional audit to be completed.