Tether [USDT] recently released a three-page transparency update, which was a product of Freeh, Sporkin & Sullivan LLP [FSS], a legal firm founded by three former federal judges, including a former FBI director. Tether is a Hong Kong incorporated company which created a cryptocurrency identical to the US dollar.
Hong Kong incorporated Tether has faced a lot of criticism for its reluctance to prove that its US dollar Tether is backed by corresponding US dollar reserves. The update released on Wednesday marked that the USDT token with a $2.55 billion market cap is backed by physical dollars in two separate banks. One of the two banks is reportedly the Peurto Rico based Noble Bank. However, none of them have given a public confirmation yet.
Online access to the Tether bank accounts, statements, and employees holding Tether assets were given to the FSS. The bank accounts were reviewed on June 1 without issuing a prior warning. They discovered that the assets exceeded the market cap by a whopping $7 million, which indicated that the token is backed by physical currency.
“As part of the Engagement, FSS was able to confirm the U.S. Dollar balances in accounts owned or controlled by Tether at its banks, including selecting the appropriate confirmation dates, and reporting to Tether as to the results of such inquiries,” FSS wrote in its report. “As per the letter of engagement, FSS selected the dates for balance confirmations without prior notice to or consultation with Tether.”
Maintaining the anonymity of the banks, FSS provided an information on the company’s accounts:
“FSS received the following confirmations from the respective banks by sworn and notarized statements provided by duly authorized personnel.
BANK 1: $1,968,538,584.82 USD (unencumbered)
BANK 2: $576,528,652.00 USD (unencumbered)
TOTAL: $2,545,067,236.82 USD”
This report released after the researchers, John Griffin and Amin Shams published a 66-page report “Is Bitcoin really Un-tethered?” which suggested that Bitcoin prices during the last year’s bull run had been manipulated by USDT and also, that the assets may not be backed by USDT.
Contrary to the reports, Tether repudiated the allegations against the token and committed to strive for more transparency and efficiency. They said:
“To address allegations head on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves. Full stop. Memoranda, consulting reports, industry leaders, cryptocurrency pioneers, and competitors have all confirmed this. Reserves have always, and will always, match the number of Tethers in circulation.”
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