Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the recent news of Tether being in talks with a big four Auditor to conduct an audit of their 1:1 backing of the stablecoin USDT.
Tether Audit with Big Four Auditor
The CEO of Tether, Pabolo Ardoino, has stated that a full audit is a “top priority” for the issuer of the world's most popular stablecoin USDT. The company is apparently looking to hire a a Big Four accounting firm to undertake the task after they have faced recent criticism. The audit will look to verify the reserves of the company and confirm the 1:1 issuance of the stablecoin against the United States dollar.
Ardoino reportedly said the audit process would be more straightforward under pro-crypto US President Donald Trump as rising industry concerns regarding Tether has sparked fears of a potential FTX style liquidity crisis as the company lacks third-party audits. He told Reuters on March 21:
“If the President of the United States says this is top priority for the US, Big Four auditing firms will have to listen, so we are very happy with that. It’s our top priority.”
This would be the first-ever full financial audit and will aim to prove that its USDT reserves are truly backed at a 1:1 ratio. This claim has often been met with suspicion as so far having no official independent audit means there’s no proof only Tether’s words and claim, leaving the industry full of doubt and speculation. Tether are currently subject to quarterly reports but not a full independent annual audit, a process which would be much more extensive and provide more assurance to investors and regulators.
Ardoino did not specify which of the Big Four accounting firms would be undertaking the audit, with PricewaterhouseCoopers (PwC), Ernst & Young (EY), Deloitte, or KPMG the four in contention. The value of USDT is maintained through its claims of being pegged 1:1 with the United States dollar and this means that every USDT token in circulation is backed by reserves equivalent to its circulating supply. Among the reserves are traditional currency, cash equivalents and other assets.
In a push to strengthen its financial operations, Tether have hired Simon McWilliams as Chief Financial Officer. This shows the more serious approach to conducting a full audit being undertaken by the company. Back in September 2024 Cyber Capital founder Justin Bons raised concerns over the lack of transparency at Tether. He stated:
“[Tether is] one of the biggest existential threats to crypto. As we have to trust they hold $118B in collateral without proof! Even after the CFTC fined Tether for lying about their reserves in 2021.”
He was not the only one to raise concerns, with the Consumers’ Research, a watchdog, also publishing a report which took aim at Tether for its lack of transparency. Back in 2021 the United States Commodities and Futures Trading Commission (CFTC) fined Tether a $41 million civil monetary penalty for lying about USDT being fully backed by reserves. This only added fuel to the fire and increased doubts and concerns over the company.
In recent times Tether have voiced their disappointment over new European regulations which have resulted in major exchanges such as Binance being forced to delist Tether (USDT), along with nine other tokens, from their European holders accounts. This came about as part of the MiCA regulations. A spokesperson for Tether told Cointelegraph:
“It is disappointing to see the rushed actions brought on by statements which do little to clarify the basis for such moves.”
Tether’s decision to undergo an independent financial audit is a pivotal moment for the crypto industry. For years they have been questioned and a cloud of doubt has hung over the company. The audit could serve as an important moment for Tether’s long-term credibility and it could potentially help the company to navigate global regulations and strengthen USDT’s role in crypto trading.
https://x.com/paoloardoino/status/1885345499600781421
Tether are also looking to engage with United States lawmakers in regards to shaping the federal regulations for the stablecoin sector. The company has been in discussions with Representatives Bryan Steil and French Hill, key figures behind the STABLE Act introduced on Feb. 6. Ardoino also confirmed the company is looking to contribute to two additional stablecoin bills proposed by other legislators.
Have a great day.
Peace. CryptoGod-1.
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