This is not the audit you’re looking for.
Tether has released a three-page transparency report[1] authored by Washington, DC, law firm Freeh Sporkin & Sullivan LLP[2] (FSS).
The Hong Kong-incorporated company, which created a cryptocurrency equivalent to the US dollar, has faced mounting criticism[3] for its failure – or, perhaps, unwillingness – to prove that its US dollar Tether[4] (USDT) is backed by corresponding US dollar reserves. If Tether does not possess the reserves that it claims to, then there could be a breakdown of trust in the USDT, which may ripple throughout the broader cryptocurrency economy.
Unfortunately, due to its numerous stipulations, including the fact that FSS did not use Generally Accepted Accounting Principles[5] (GAAP) or Generally Accepted Auditing Standards[6] (GAAS), the document Tether shared on Wednesday does little to alleviate industry concerns. Simply put, FSS didn't conduct an audit, and the process itself was insufficient. So much for "transparency."
Note: In January, Tether's relationship with Friedman LLP dissolved. Friedman is an accounting and advisory services firm that was meant to provide the long-awaited audit. It also emerged that, in December, the Commodity Futures Trading Commission (CFTC) subpoenaed Tether and Bitfinex, a closely affiliated cryptocurrency trading platform.[7][8]
Furthermore, what the FSS report does cover is severely limited. The law firm only offered a glimpse into a single day of Tether's operations: June 1, 2018. That's not enough to demonstrate consistency.
"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," FSS
