Consumers' Research Warns of Tether's Transparency Issues
Tether, the largest stablecoin issuer, faces criticism for lack of transparency and failure to prevent illegal entities from operating, according to a consumer advocacy group's report.
Highlights:
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Report compares Tether to FTX and Alameda Research.
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Tether accused of doing business with dishonest players.
A consumer advocacy group, Consumers' Research, has issued a report criticizing Tether, the issuer of the largest stablecoin, USDT, for its lack of transparency regarding its dollar reserves.
The report, released on September 12, highlights that Tether has never undergone a full audit by a reputable accounting firm, raising concerns about its claims of being backed 1:1 by U.S. dollars. This situation has drawn comparisons to the collapse of FTX and Alameda Research, both of which faced similar transparency issues.
The report includes an open letter to state governors, radio advertisements, and a dedicated website, TetherWarning.com, urging caution for consumers. Executive director Will Hild emphasized that Tether's history of "false claims" and "deliberate lack of transparency" poses risks to U.S. financial controls.
The group also pointed out that Tether has engaged with questionable entities and facilitated transactions that may bypass international sanctions.
Despite Tether's claims of improving transparency, including hiring former Chainalysis economist Philip Gradwell and forming a financial crime unit, the company continues to rely on limited attestations from BDO Italia rather than comprehensive audits.
The ongoing scrutiny underscores the growing concerns over the stability and regulatory compliance of Tether and its impact on the broader cryptocurrency market.
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