Tether Faces Transparency Issues with its US Dollar Reserves: Report

Consumers’ Research, a prominent consumer protection group, raised serious concerns over the stablecoin issuer Tether regarding its transparency and reserve backing of USDT. 

Lack of Independent Audit Raises Concerns

Tether, the issuer behind the world’s largest stablecoin USDT, has long claimed that its tokens are fully backed by reserves, predominantly in U.S. dollars. 

However, according to Consumers’ Research, Tether has yet to provide an independent audit from a reputable accounting firm to verify these claims. The organization points out that the company has only released “attestations,” which are less thorough than full audits.

“Until a credible third-party auditor can verify their claims of 1:1 U.S. dollar backing, consumers should be cautious about investing their money with them,” said Hild.

Questionable Practices and Comparisons to FTX

The report compares Tether’s situation to the now-defunct FTX and Alameda Research, both of which collapsed due to poor financial controls and lack of transparency. 

Consumers’ Research believes that similar risks exist with Tether, especially given its alleged involvement with questionable entities and its use of USDT to circumvent international sanctions.

In its open letter to state governors, the group calls on policymakers to take immediate action to protect consumers from potential financial harm linked to Tether. The report also launched a radio ad campaign and a dedicated website, TetherWarning.com, to further highlight the risks.

SEC and JPMorgan’s Concerns Echo Transparency Worries

Tether’s Efforts to Increase Transparency

Lutnick stated, “From what we’ve seen, they have the money they say they have.”