WSJ Critiques Tether "Attestation"
The Wall Street Journal is the latest puhlication to question the safety of stablecoins in "Tether Says Audit Is Still Months Away as Crypto Market Falters." They write, "This year's slump in digital assets is pressuring crypto companies to show investors that their money is safe. So far, they haven't delivered. Many crypto companies lack the basic financial guardrails that help protect investors in traditional banks. Firms often don't publish financial statements, or have anyone check their books. Even if they are audited, there are no agreed accounting standards for digital assets." The Journal explains, "Take Tether, the company behind the world's largest stablecoin. In recent months, it launched a marketing blitz of blogs and press releases, touting its transparency, after a series of crypto firm failures rattled investor confidence in it. Tether is designed to grease the rails of the roughly $1 trillion cryptocurrency market by promising each token can be redeemed for $1. Market observers have long questioned whether the firm's reserves are sufficient and have been demanding audited information." They add, "The company has been promising an audit since at least 2017. An audit is 'likely months' away, said Paolo Ardoino, chief technology officer of Tether Holdings which issues the tether coin that recently carried a market value o $68 billion. 'Things are going slower than ... we would like,' Mr. Ardoino said. Instead of a full audit, Tether, like other leading stablecoins, publishes an 'attestation' showing a snapshot of its reserves and liabilities, signed off by its accounting firm. Audits are typically more thorough than other types of attestation. The attestations for some crypto companies sign off on the numbers provided by the company's management for a specific date and time without testing the transactions before or after that date. That process can make the reports more vulnerable to being used to paint an unduly rosy picture. A 2017 attestation of Tether was skewed by its sister company, Bitfinex, transferring $382 million to its bank account, hours before the accountants checked the numbers, the Commodity Futures Trading Commission said last year. Tether settled the case with the U.S. regulator without admitting or denying the allegations."
