Barely a week goes by without Tether being in the news, and usually for negative reasons. For months, critics of this coin have been asking for a peek at its books. However, those hopes may have been dashed after it cut ties with Friedman LLP, its auditor. This was after months of promises that the company would one day make it books visible to the public. However, there does not now seem to be any hope that it will ever happen.
Understanding the Tether Story
The Tether story has been retold so many times that it is now common knowledge. Tether comes with tethers, which are its tokens, fixed at a $1 value. These tokens (tethers) are often used in the crypto world as a surrogate fiat currency. They are even used by major exchanges for this purpose. Most people have no problem with this. They also do not dispute that Bitfinex, an exchange that holds a controlling share of Tether, is profitable.
Exchanges have been making quite a lot of money. In the last financial year, Coinbase recorded profits of $1 billion, and Binance made $300 million. Another good example of just how much exchanges are making is when Coincheck instantly compensated victims of the $400 million NEM hack, in Yen.
What people do not like about Tether is the secret manner in which it operates. Last year, it was accused of not having enough USD to cover the USDTs (tethers) it was issuing to traders. When this news hit the headlines, it agreed to an audit. Traders waited for the release of the audit, but it seemed like it would never happen. Now it appears they were right all along.
Friedman LLP Confirms the Relationship Is Over
The auditor confirmed that its relationship with Tether had ended. However, it gave few reasons as to why they have parted ways. The biggest fear from this development is if it were confirmed that tether actually does not have the USD to cover the USDT tokens that it has issued. However, even if it emerged that Bitfinex and Tether had assets, but had issued tether without good reason, it would still raise eyebrows.
Opinions on the Tether Balance Sheet
Most people are not as single-minded as tether critic Bitfinexed. They just want to be reassured that the books are in order and they can confidently trade in crypto once again. It is quite hard to predict what a collapse of Tether would do to the market. However, most experts agree it would have a negative impact. Some estimate that such a slump could last for months, all but crippling crypto-coin markets. With the silence from Tether, Trusttoken has been touting itself as its successor.
Do you think the failure of the audit is cause for concern? Leave us your thoughts in the comments section below.