Consumers’ Research, a consumer advocacy group, published a warning report on September 12 about stablecoin issuer Tether, which cited the company’s lack of transparency surrounding its US dollar reserves.
The consumer advocacy group claims that Tether has yet to submit a full audit of the dollar reserves that are believed to back its USDT (USDT) stablecoin to a reputable accounting firm, despite the stablecoin issuer repeatedly promising to audit the reserves.
The authors of the consumer research report argued that this lack of transparency was similar to the situation that led to the collapse of FTX and Alameda Research.
Table showing some of the claims from consumer research. Source: Consumer Research
The group sent an open letter to every governor in the U.S. with its claims, drawing attention to Tether’s perceived lack of transparency, and also ran a radio ad and a dedicated website detailing the consumer watchdog’s claims.
The watchdog concluded its report by accusing Tether of “doing business with bad actors” and failing to prevent illicit entities from using USDT to evade international sanctions.
Letter to the Governor from Consumer Research Report Page 1. Source: Consumer Research
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The other side of the story
In January, Howard Lutnick, CEO of Cantor Fitzgerald, which manages Tether’s U.S. securities portfolio, reassured the public about the stablecoin issuer’s cash reserves. “From what we’ve seen and what we’ve done a lot of work with, they have the money they say they have,” Lutnick said at the time.
To increase transparency, Tether hired former Chainalysis chief economist Philip Gradwell in July to produce a USDT usage report, which is provided to U.S. regulators and investors and helps shed light on how the stablecoin is being used.
Later in August, Tether CEO Paolo Ardoini announced that the company had assisted more than 145 law enforcement agencies in recovering $188 million worth of USDT related to illicit activity since 2014.
In the first half of September, Tether also announced that it was launching a financial crimes unit in partnership with Tron. The new “T3 Financial Crimes Unit” will help identify and freeze illegal USDT transactions on the Tron network, the largest blockchain network for USDT transactions.
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