Audits are necessary to build confidence in those who invest in something, be it a particular company or product. This also applies to cryptocurrencies, especially stablecoins like Tether. In that sense, Tether executives spoke to the media about USDT, and announced that they will launch audits soon. This is important, considering that in the past Tether has been reluctant to release data to regulators.
Tether (USDT) is a stablecoin that is pegged 1: 1 to the US dollar. This makes the value of the currency stable, unlike the value of cryptocurrencies like Bitcoin. Therefore, you have certain different conditions that make an audit more necessary. It is the third largest cryptocurrency by market capitalization.
What was the announcement of the Tether audits?
The company behind USDT, Tether Inc, announced that it will publish its audits for years to come, although it has not yet done so. But recently, Stu Hoegner, the company’s general counsel, said in an interview with CNBC that an audit “is in progress” and will arrive in “months, not years.” The company has long claimed that its currencies are backed by US dollars in reserves (almost 80%). This percentage is equivalent to cash, bonds, secured loans, and other investments.
The USDT coin is the backbone of the cryptocurrency economy due to its huge trading volume. In Asia, the asset powers the cryptocurrency market as it helps merchants access Bitcoin. It is also reportedly useful for Chinese capital flight.
The only problem is that some do not believe that it is actually backed by real US dollars. A research paper published by Professor John Griffin of the University of Texas in 2018 alleged that Tether is used to manipulate the Bitcoin market. Griffin followed up with another similar report in late 2019, although its findings have been questioned by other scholars.
The company also just resolved a fraud investigation with the New York Attorney General’s Office, which concluded that “Tether’s claims that its cryptocurrency was fully backed by US dollars at all times was a lie.” Hence the need for an audit.
The statements of the company representatives in this regard
Hoegner said in the interview, along with CTO Paolo Ardoino, that the market trusts USDT. “More importantly, our 24-hour volume on exchanges lately is $ 45-50 billion, dwarfing the competition,” he said. «We believe that the market has spoken. The market has demonstrated its trust and confidence in Tether and its products».
In May, Tether published its reserve breakdown for the first time since 2014. Its executives claim that there is no strange matter behind how the cryptocurrency works. “We are leaders in transparency,” said Hoegner. “We’re not just keeping up with the rules, we’re also helping shape them, and we’re helping law enforcement and regulators globally.”
However, the aforementioned audits are in fact a reality and not one of the empty promises above. We will have to wait and see if this time it is a fact.