The world’s largest stablecoin issuer, Tether, has shifted the date for its full financial audit by “months,” according to chief technology officer Paolo Ardoino.
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Headquartered in the British Virgin Islands, Tether has long been embroiled in controversy for not fully revealing how it is financially backed. Questions have long surfaced about whether or not the popular stablecoin can prove that it has the fiat currency backing the Tether stablecoin.
Although Tether has pledged to disclose its reserves for more than 5 years, it has yet to deliver on the promise, sparking more questions from customers and regulators and exacerbating concerns about the firm’s lack of transparency.
So far, it has failed to provide a full financial audit and only provides periodic attestations each quarter, as mandated by a settlement with the New York Attorney General’s Office. The office slapped the firm (and crypto exchange Bitfinex, which is owned by Tether’s parent company iFinex) with a $18.5 million fine in 2021. The firm is currently prohibited from operating in New York state.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines. Tether’s claims that its virtual currency was fully backed by US dollars at all times was a lie,” said New York Attorney General Letitia James at the time. “These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”
Since July 2022, Tether has contracted with BDO Italia to conduct quarterly attestations. By 2023, the company says it will release attestations on a monthly basis.
Other stablecoin issuers like Circle (maker of the USD Coin) already provide monthly attestations.
The most recently available report from June 2022 shows that Tether and its subsidiaries had consolidated assets valued at nearly $66.4 billion, with $66.2 billion in liabilities.
The assets include nearly $30 billion in U.S. treasuries, alongside $6.8 billion in money market funds.
Tether maintains $8.5 billion in commercial paper, and over $5.5 billion sit in the ambiguous “other investments” category.
Recently, Tether announced that its holding of commercial paper dropped by nearly 60%, and it plans to bring that number down to zero.