Consumer protection group calls out Tether reserve for opaqueness
Tether, the company that issues Tether ($USDT), is once again embroiled in controversy. The U.S. consumer protection organization "Consumers' Research" issued a report on September 12, raising serious warnings about the transparency of Tether's U.S. dollar reserves, accusing the company of failing to comply with its long-term commitment to provide a comprehensive audit report by a credible accounting firm. The group believes this lack of transparency is similar to the issues that led to the collapse of FTX and Alameda Research.
The report pointed out that although Tether has repeatedly promised to audit its reserves, it has yet to see a complete audit report from any credible accounting firm. This has caused consumers to doubt the U.S. dollar reserves behind $USDT, and then worry about whether the stablecoin really has sufficient financial reserves to support its issuance, as Tether claims.
Image source: Consumers' Research Consumers' Research list of accusations against Tether
The organization’s report was later accompanied by an open letter to U.S. governors, reminding state governments of Tether’s transparency issues. In addition, the consumer protection organization further elaborated on its accusations through radio advertisements and dedicated websites, emphasizing that Tether may be involved in "doing business with bad actors" and even allows some unscrupulous organizations to use $USDT to circumvent international sanctions.
Tether responds proactively and emphasizes compliance efforts
In response to these accusations, Tether has always maintained that its operations are legal and its financial reserves are sufficient. In January this year, Cantor Fitzgerald CEO Howard Lutnick stated in an interview with Bloomberg that Tether’s financial reserves are reliable. He noted that based on the company’s detailed review of Tether’s funds, it is confident it has reserves commensurate with its issuance.
In addition, Tether also hired former Chainalysis chief economist Philip Gradwell in July this year to be responsible for monitoring the use of $USDT, and plans to provide relevant reports to U.S. regulators and investors on a regular basis to increase transparency. At the same time, Tether also announced in August that it had successfully assisted 145 law enforcement agencies in recovering $108 million in $USDT involved in criminal activities since 2014.
In order to further combat illegal transactions, Tether recently joined forces with Tron to establish the "T3 Financial Crime Unit", which is responsible for detecting and freezing illegal $USDT transactions on the Tron blockchain. These measures demonstrate Tether’s efforts to combat money laundering and other criminal activities, and are also an attempt to respond to external doubts that it may be involved in illegal activities.
If you want to know more about Tether, you can read the article "What is USDT Tether?" previously compiled by "Crypto City". 》.
The future is unclear and transparency issues need to be resolved.
Although Tether continues to emphasize its efforts to be legal and compliant, warnings from consumer protection groups have still dealt a blow to its image. As global regulations on cryptocurrency intensify, whether Tether can effectively solve the transparency issue will become one of the key challenges for its future foothold in the market.
With Tether’s market capitalization occupying an important position in the global cryptocurrency market, this controversy will undoubtedly have a significant impact on investor confidence. Whether it is the questioning of consumer protection organizations or Tether's response, they all show the potential risks and challenges of the stablecoin market. Future market trends deserve close attention.
Further reading
Starting to transform when the market is not good? Tether invests 100 million magnesium in agricultural companies to enter the real economy
Tether currency rushes! Tether: Over 300 million users rely on USDT, may stablecoins replace the US dollar?
Who said we can only do stablecoins? Tether spends 1 billion magnesium to invest in AI, biotechnology