Reports surfaced Saturday night that Tether and their auditor, Friedman LLP, had dissolved their relationship. Due to the weekend, no independent confirmation has been received. The calls to Friedman LLP are switched to voicemail
It seems unusual for one or the other company to take such a step without issuing an official statement, all the more that it would create a fire storm. Many in the crypto community have had concerns as to whether Tether actually maintains sufficient reserves to buy back all the outstanding tokens in circulation. The company hired Friedman LLP to conduct an audit to resolve the community's concerns.
So Much for Transparency
Tether has been the source of much controversy over the past year, and the company has struggled to respond to criticism . The company, which shares some of the same owners as Bitfinex, a major cryptocurrency market, wrote last fall:
"Friedman LLP was hired to perform verification procedures However, as the number of Tether in circulation has increased significantly in recent months, we have also asked Friedman to temporarily analyze our bank balances and our outstanding token balance. Friedman has agreed to provide us with consulting services to provide management with useful information regarding Tether's cash position and the issued and outstanding Tether tokens on an interim date. for us promptly, using a procedure date of September 15, 2017. These consulting services do not constitute a no audit or attestation mission, which would include a considerably enlarged scope of proceedings and would take much longer "
Any" Dissolution "of the Relationship Between Tether and Friedman LLP would raise a lot of mistrust on the part of the community, as this would seem to go against Tether's desire to increase transparency
What is it?
Tether (the company) claims to receive deposits of US dollars from investors, after which they create an equivalent number of links (the currency) and give those links to the depositor. Tether claims to have $ 2.2 billion in deposits in its bank accounts to support each existing anchor chip on a 1: 1 basis. Without audit, however, it can not be proven that Tether actually has these reserves, or that they are not used for anything other than the support of tokens.
Suspicion and Legal Threats
Some members of the digital currency community have expressed their deep skepticism about the issue of tokens. It is not uncommon for the company to release massive amounts of attachment, 50-100 mln at a time, which leaves many wondering who the investors are depositing these funds. Since the disruption of Bitfinex's banking relationship early last year, the exchange has become heavily dependent on the chips of its sister company to transfer funds in and out of the stock market. Some have speculated that Tether could exploit a fractional reserve, issuing more chips than those for which they were saved, and sending them to Bitfinex. The exchange then uses these chips as collateral to create long or short leveraged positions in the Bitcoin market.
Charlie Lee, the founder of Litecoin, commented:
There is a fear about what the recent price hike was helped by the impression of USDT (Tether) which is not supported by USD in a bank account.
I invite @bitfinex and @Tether_to to perform a third party audit to prove their reservations. Please do the right thing. Thank you
– Charlie Lee [LTC] (@SatoshiLite) November 30, 2017
In early December, Bitfinex threatened to "sue" the anonymous blogger "Bitfinex & # 39; ed" on the basis of his claims of wrongdoing on the part of Bitfinex and Tether.
This story will be updated as new information becomes available.