In an attempt to reassure investors that its cryptocurrency is backed up by U.S. dollars, Tether has had their bank deposits of $2.55 billion confirmed by the Law firm Freeh Sporkin & Sullivan LLP.
The law firm, co-founded by FBI director Louis Freeh, didn’t carry out an official audit. However, they had access to the company’s accounts at two banks for several weeks and released data on how much money they had in a single day. They also had access to statements and employees of the financial institutions.
Stuart Hoegner, Tether’s general counsel spoke about why they could not carrying out an audit:
The bottom line is an audit cannot be obtained. The cryptocurrency market looks too nascent for large accounting firms to consider taking on clients who offer digital coins. The big four firms are anathema to that level of risk. We’ve gone for what we think is the next best thing
The law firm confirmed that Tether had $2.54 billion on 1st June. The date was picked without Tether’s prior knowledge.
There has been plenty of speculation surrounding the company that the money isn’t actually there. Last year an analysis of the company was carried out by the accounting firm Friedman LLP. Despite this, scepticism has persisted.
The report by Freeh Sporkin & Sullivan LLP comes just a week after Tether were accused of artificially supporting the price of Bitcoin. A professor from the University of Texas claimed that he noticed a pattern where the cryptocurrency was being spent on Bitcoin in ways that could manipulate Bitcoin’s price.
The Chief Executive Officer JL van der Velde has denied the claim.
Despite speculation, we have consistently stated that Tether is backed by USD reserves at or exceeding the Tethers in circulation at a given moment, and we’re glad to have independent verification of this to answer some of the questions posed by the public.
Many banks have chosen to stay away from the crypto market, for reasons such as money laundering. Tether is important because it provides stable value in place of the dollar where banks are not available.