Tether Audit is “likely months” away: CTO Paolo Ardoino

Paigambar Mohan Raj
Source: Decrypt

Tether, the largest stablecoin issuer (USDT) has often faced backlash for the lack of audits of its financial reserves. After promising a full financial audit in 2017, Tether Holdings Limited continues to push the dates back. Many have questioned the firms reserves, and whether the amount is sufficient and redeemable.

According to a recent report by the Wall Street Journal (WSJ), a full audit of the company is still months away, as stated by CTO (Chief technology officer) Paolo Ardoino.

Ardoino stated,

“Things are going slower than we would like.”

Nonetheless, Ardoino expects the company’s capital cushion to grow over the next few months. Ardoino cites increasing interest rates, which would increase returns from the company’s assets, as one reason. He said that Tether successfully retrieved $7 billion in customer funds in under 48 hours during the most recent crypto meltdown.

Ardoino stated,

“I don’t think we are the systemic risk in [the crypto] system.”

However, Ardoino’s statements do not provide clarity on the company’s financial reserves.

How does Tether keep investors informed about its reserves?

Like other top stablecoins, Tether releases an attestation giving a glimpse of its reserves and liabilities. The attestation, rather than a complete audit, is approved by an accounting firm.

Compared to other forms of attestation, audits are often more thorough. Some cryptocurrency organizations’ attestations certify their figures for a specified day and time without checking the transactions that occurred before or after that period. Due to such procedures, the reports may be more easily manipulated to present an overly positive image.

In 2017, Tether’s attestation was manipulated when the firms’ sister company Bitfinex transferred $382 million to its account. The transfer took place mere hours before the accountants checked their numbers. Tether settled the case with the U.S. Commodity Futures Trading Commission (CFTC) without admitting to or denying the allegations.

According to its website, as of August 25th Tether’s $67.7 billion declared assets were just $191 million more than its $67.5 billion liabilities. Accordingly, a 0.3% decline in assets might theoretically make Tether insolvent, a fact that skeptics fear may undermine investor confidence and accelerate redemptions.

Tether recently changed its accountancy firm from the Cayman Islands-based group, to BDO Italia. BDO Italia is the Italian branch of the accounting giant, BDO. Nonetheless, investors are still eagerly waiting for a complete audit of the stablecoin issuer. An audit will not only clear the suspicious air, but also increase customer confidence.