Consumers’ Research, a non-profit organization for consumer protection in the United States, recently issued a report on stablecoin issuer Tether (USDT), pointing out that even though Tether promised to conduct a financial audit after its establishment, it has not yet fulfilled its promise. Stablecoin issuer Tether claims that its USDT is pegged to the U.S. dollar at a 1:1 ratio. Although stablecoin technology has a certain value in the market, if there is no third-party audit agency to confirm the asset guarantee behind USDT, there is a huge risk hidden for consumers. He also said that Tether’s problems are similar to the situation before FTX’s collapse.
Quickly understand the key: Audit is not the same as attestation. Audit provides the highest level of endorsement because it covers a wide range of topics and has in-depth procedures; while attestation provides a lower level of endorsement and is mainly focused on specific matters or statements. Accountants therefore have more confidence in the audit's conclusions.
Preventing crypto fraud while also caring about Tether, state governments are doing their part
Consumers' Research cited a report on July 10 this year that several U.S. state prosecutors jointly filed objections to the U.S. Securities and Exchange Commission (SEC) deliberately bypassing state consumer protection regulations and self-regulating cryptocurrency objections, highlighting the possible problems that may arise in the cryptocurrency field. On the issue of fraud, similar reports were cited, indicating that related fraud incidents had increased by 45% in the past year. State attorneys have argued that it is state responsibility to protect citizens from potential crypto scams, a position based on state consumer protection statutes. Consumers’ Research believes states must pay close attention to the threat posed by Tether.
(Taiwan’s Financial Supervisory Commission lacks supporting supervision, and the prosecutors group criticized it: looking for guidance from specific industry players, and letting sub-level industry players and currency dealers go.)
Tether claimed to conduct an audit, but it has not yet materialized
Consumers' Research pointed out that Tether has not conducted an audit, which is a clear warning to USDT. Tether has promised to conduct audits many times since 2017. As of August 2022, the CEO still said that the audit "will be completed within a few months." Perfunctory, it has not yet been fulfilled.
2017: Tether commits to full audit.
2018: Tether releases a report written by a law firm (not an accounting firm) claiming that USDT is fully pegged to the U.S. dollar. The U.S. Department of Justice launched an investigation into whether traders used Tether and Bitfinex to manipulate the cryptocurrency market.
2019: The New York State Department of Justice found that Tether moved hundreds of millions of dollars to cover up the loss of $850 million in customer funds.
2021: Tether is forced to cease trading activities in New York and pay an $18.5 million fine.
2022: Tether reaches settlement with the U.S. Commodity Futures Trading Commission (CFTC), dropping charges of false claims of USDT support. The U.S. Securities and Exchange Commission (SEC) fined a law firm that claimed USDT is backed by the U.S. dollar, citing financial misconduct.
2024: Tether still hasn’t completed its audit.
(The world’s four largest accountants dare not accept Tether’s audit, Tether CEO: We are working hard to build relationships)
(Tether CEO Interview: It’s sad to gloat about Binance, Tether is trying to conduct a comprehensive audit)
Questions raised about Tether’s ties to criminals
Consumers’ Research pointed out that in addition to asset guarantee issues, Tether also cooperates closely with criminals, which also makes the outside world question whether Tether has appropriate risk management capabilities.
U.S. and British authorities are investigating $20 billion in transactions involving Tether on Russian cryptocurrency exchange Garantex, which has been sanctioned by the U.S. Treasury Department IRS. As of July 2024, Tether is still processing transactions from cryptocurrency exchange BitPapa. The exchange was sanctioned in March 2024 for aiding Russia in the Russo-Ukrainian war. According to reports, Tether has helped create a parallel economy outside of U.S. legal norms and "undercut U.S. efforts to combat illegal arms trade and fraud."
Tether and Tron cooperation stirs controversy, the United Nations warns of the risks of USDT
The report pointed out that in March 2023, the U.S. Securities and Exchange Commission (SEC) had charged the blockchain company Tron and its founder. In November of the same year, it was reported that Tron had become the first choice for terrorist organizations to transfer funds. Although Tron has long been accused of fraud and illegal transactions, Tether still chose to continue to operate on the platform.
Supplement: However, in early September this year, Tether seemed to be more active in proving its determination to fight crime and launched the T3 FCU alliance; however, Tether’s cooperation with Telegram blockchain Ton may also be due to Telegram’s assistance in drug trafficking and terrorism financing. Behavior is stained with another layer of gray.
(Tether, TRON and TRM Labs join forces to prevent financial crime, T3 FCU fights cryptocurrency crime)
In January 2024, the United Nations Office on Drugs and Crime (UNODC) stated that USDT is closely related to underground casinos, money laundering and transnational criminal activities in East and Southeast Asia, especially USDT on the Tron blockchain because of its stability and anonymity. and low transaction fees, it has become the tool of choice for online fraud and money laundering.
In April 2024, USDT had become “indispensable” in helping Russia and North Korea circumvent international sanctions.
Taking the collapse of FTX and Celsius as a warning, calling on state governments to fully protect
Consumers’ Research stated that it continues to provide American consumers with the necessary information to make informed decisions and avoid illegal financial harm. At the same time, it was said that Tether’s problems are similar to the situation before the collapse of FTX and Celsius. These companies used deceptive and misleading marketing techniques, causing global investors to suffer billions of dollars in losses. It also calls on state governments to supervise Tether’s operations within their own borders and take appropriate measures to protect consumers from financial losses.
(Celsius has completed the distribution of 93% of bankruptcy funds, and the IPO of the transformed mining company has been questioned)
(FTX Claim Tax Registration Steps Tutorial for Lazy Guys: Step 7 Allocation-Tax Requirements)
This article US Consumer Protection Organization warns Tether: It has not yet been audited and may become the next FTX first appeared on Chain News ABMedia.
