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New Report Provides Proof Tether`s USDT is Fully Backed by Physical Dollars

 

In a report released yesterday – June 20, 2018, purported to be a “transparent update” from Cryptocurrency start-up Tether, the company has sought to show proof that its dollar-pegged US dollars token which was reported to have had a $2.55 billion market cap as of June 1, is strongly backed by physical dollars deposited in its accounts with two banks. This report was put together by Freeh, Sporkin & Sullivan LLP (FSS), a reputable legal firm jointly founded by three former federal judges including a former FBI director.

 

In the quest to explain what went into generating the recently released FSS report on Tether, the law firm has noted that even though a formal audit wasn`t carried out, it had gone to great lengths to ascertain the facts; the firm asserted that it was allowed unrestricted online access to the bank accounts and statements of the two Banks with which Tether purportedly deposit its assets. They were also allowed access to workers of the two said banks – banks both companies have currently chosen to keep unidentified.

 

The legal firm has also noted that earlier this month, it conducted a thorough review of the bank accounts of Tether without giving prior notice to Tether. It was found that Tether`s assets as deposited in the company`s banks exceeded USDT`s outstanding market cap by about $7 million. FSS eventually came to the firm conclusion that Tether`s US dollar token is fully backed by physical dollars.

 

In the recently released report, FSS stated: “As part of the engagement, FSS was able to confirm the U.S. Dollar (“USD”) balances in accounts owned or controlled by Tether at its banks, including selecting the appropriate confirmation dates, and reporting to Tether as to the results of such inquiries. As per the letter of engagement, FSS selected the dates for balance confirmations without prior notice to or consultation with Tether.” The legal firm further noted: “FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018.”

 

Barely a week ago, researchers in the University of Texas published what ccn has referred to as an “explosive paper” which pointed to the manipulation of Bitcoin`s price during the bull run of 2017. The paper suggested that USDT was used to facilitate such a manipulation, adding that in some cases, these tokens were backed by inadequate availability of US dollars. Tether however released a statement debunking the allegations.

 

Tether also expressed willingly and commitment to be more transparent in its operations. The company noted: “to address allegations head on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves. Full stop. Memoranda, consulting reports, industry leaders, cryptocurrency pioneers, and competitors have all confirmed this. Reserves have always, and will always, match the number of Tethers in circulation.”

 

In an effort to throw some light on the rationale behind Tether`s choice of a review rather that a full audit of its operations, Stuart Hoegner, general counsel for Tether reportedly told Bloomberg: “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,” he added.

 

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