Tether has presented a unofficial report proving the healthy status of its bank accounts. However, some believe that the document can not serve as proof that tether’s tokens are fully backed by the US dollar.
Why it is important
- Tether token was created as an electronic version of the dollar, meaning their U.S. dollar reserves should be 1 to 1 to the amount of tokens issued. But in the crypto community there was talk that tether simply does not have the money to back each token by a dollar. 1. The report was compiled by Freeh Sporkin & Sullivan, LLP (FSS), which is a law firm, not an auditor. So the report on the status of tether's bank accounts is not a full-fledged document.
FSS itself indicated in the document was compiled without a compliance to auditing and accounting standards. However, Stu Hoegner, tether's general counsel said that its necessary to adapt accounting standards for cryptocurrency companies. In his opinion, tether is not the only company for which its almost impossible to conduct a full on financial audit.
Hoegner also expressed confidence that key values remain the same as research was based on a snapshot of bank account balances at a certain point in time. But what raised the eyebrows is that the report only showed financial information for one specific day - June 1. FSS on its behalf claims that on June 1, tether had more money than required to secure the then-in-use USDT tokens ($2.55 billion in two banks vs. $2.54 billion). However, the document fails to mention if at any point the tokens were not fully backed.
The law firm has taken a number of measures to prevent the possibility of a scam. FSS chose the date for invoice verification without issuing a prior notice to the company. The firm also did not disclose what information it received from banks.
It should be noted that the firm employed by tether Freeh Sporkin & Sullivan, LLP was founded by FBI director Louis Freeh.
By Ekaterina Ulyanova