According to an interview with Tether’s general counsel Stuart Hoegner, law firm Freeh Sporkin & Sullivan LLP had access to two of Tether’s bank accounts for weeks and released the amount of dollar holdings as of June 1, although not as part of an official audit.
The bank accounts will not be named due to privacy concerns, Hoegner notes, adding that the firm had access to banks statements and employees, as well as contact with Tether executives.
Law firm Freeh Sporkin & Sullivan LLP, co-founded by former FBI director Louis Freeh, noted in their statement that their conclusions are specific to the close of business on June 1, 2018:
“FSS is not an accounting firm and did not perform the above review and confirmations using Generally Accepted Accounting Principles [...] FSS has assumed, without further inquiry, that the bank personnel providing the confirmations were duly authorized to provide such confirmations, and that the confirmations were correct.”
Tether’s general counsel said that the number of USDT issued was equal to $2.54 billion on June 1, and Coinmarketcap data shows that there is now a total of about 2.8 billion USDT currently in circulation. As to why an official audit was not conducted, Hoegner told Bloomberg that large accounting firms would not take on clients who work with cryptocurrencies:
“The bottom line is an audit cannot be obtained [...] The big four firms are anathema to that level of risk. We’ve gone for what we think is the next best thing.”
Tether and crypto exchange Bitfinex, which share a CEO, had reportedly received subpoenas from U.S. regulators on Dec. 6, 2017, with the impetus for them still unclear. The cryptocurrency again fell under scrutiny from the crypto community in the wake of dissolving their connection with an auditor before the official audit was released.
However, in February, a study from Bitmex research showed that Tether could have enough cash reserves, possibly in a Puerto Rican bank, to match its token issuance.
At the end of May, Tether had minted another 250 million USDT, rekindling the issue of their dollar reserves. Then, a study released this month by the University of Texas again brought Tether to the spotlight as it blamed both the cryptocurrency and connected crypto exchange Bitfinex for Bitcoin (BTC) price manipulation in 2017, specifically in regards to Bitcoin’s price rise to $20,000 in December of last year.
In response to the claims of Bitcoin market price manipulation, Tether CEO J.L. van der Velde told Bloomberg that the assertions were untrue:
“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.”
The suspected Tether Bitcoin manipulation had brought down Bitcoin futures prices 55 percent this week.