Embattled cryptocurrency startup Tether has reportedly severed ties with Friedman LLP, an accounting firm hired to audit the company’s balance sheet.
Tether, the issuer of the dollar-pegged USDT token, had contracted with Friedman to verify that the nearly 2.3 billion USDT in circulation are fully-backed by real dollars stored in Tether’s bank accounts.
Now, though, the two firms have parted ways.
“We confirm that the relationship with Friedman is dissolved,” a Tether spokesperson reportedly told CoinDesk.
Neither Tether nor Friedman LLP immediately responded to CCN.com’s requests for comment.
However, the Tether spokesperson reportedly CoinDesk that Friedman was not completing its audit in a “reasonable time frame.”
“Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success,” the spokesperson explained.
Days earlier, pseudonymous Tether critic Bitfinex’ed said that he was “pretty sure” that the “auditors ran for the hills,” purportedly because he believes Tether is printing USDT “out of thin air.” He has argued that Tether and Bitfinex — one of the world’s largest cryptocurrency exchanges — are artificially inflating the bitcoin price to cover up Bitfinex’s alleged insolvency.
Bitfinex has called such claims “patently false” and has threatened to pursue legal action against “bad actors,” although it did not mention Bitfinex’ed by name.
In any case, the dissolution of Tether’s relationship with Friedman LLP is likely to intensify criticism of USDT, which plays an increasingly large role in the cryptocurrency economy through cryptocurrency exchanges, where it often serves as a substitute for US dollars.
Julian Hosp, co-founder of cryptocurrency startup TenX, recently listed the uncertainty surrounding USDT as a potential “trigger” for a cryptocurrency market crash. He predicted that if Tether is operating a fractional reserve — the probability of which he pegged at 10 percent — it could lead to an immediate 10 to 15 percent market decline.
Other analyses, such as the anonymously-authored “Tether Report” — forecast that a USDT-induced crash could ultimately reduce the Bitcoin price by as much as 80 percent.
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Last modified: May 20, 2020 9:09 PM UTC