Tether, the infamous stablecoin has become the talk of the town again after changes to the details of the manner in which it backs up tokens in supply.
As per the previous reports, various online users posted alarming changes to the Tether website. It is to be noted that the website has apparently changed the way that the company is providing a guarantee for the tokens it issues.
Notably, Tether is a stablecoin backed up by the USD at a 1:1 ratio. This essentially means that the company has $1 for every USDT that is in circulation. However, this has long been a point of controversy in the wider crypto ecosystem due to the fact that Tether has in no way carried out a third-party assessment of its financial accounts.
Tether’s website has apparently adjusted the particulars of how it ensures a reserve for circulating tokens. However, the exact date of the change is not known. With the changes, the “100% Backed” statement no longer claims that every USDT is backed by fiat currency. The statement is as follows:
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”
Moreover, the company’s latest attestation of its financial accounts is a document from Freeh, Sporkin & Sullivan LLP. Notably, Freeh, Sporkin & Sullivan LLP provided the confirmation of Tether’s currency reserves in 2018.
Interestingly, there are a number of clauses near the end of the document make the assurances insignificant.
The first point of concern is that Freeh, Sporkin & Sullivan is not an accounting firm. In fact, they did not make the confirmations using generally accepted accounting principles. Furthermore, the document also makes it clear that the confirmation should not be construed as the result of an official inspection.
Moreover, the aforementioned findings are only seen as being valid as of June 2018. This essentially means that the company still has not provided third-party assurance of reserves for circulating currency for over 9 months.