Tether, the crypto-currency firm that has faced criticism over its claims to hold $1 in reserve for every token it issues, has shared a report by a Washington-based law firm that indicates the company had, on June 1, approximately $2.55 billion in its accounts.
The report, produced by Freeh, Sporkin & Sullivan LLP (FSS), was released one week after a University of Texas research paper alleged Tether’s token could have been used to manipulate Bitcoin’s meteoric price rise last year.
The FSS report is not a full audit of Tether, but formally states the law firm received sworn and notarized statements from the company’s two banks.
“FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018,” the FSS report said.
The law firm, co-founded by former FBI director Louis J Freeh, said it chose its day of examination and added that it also conducted “comprehensive examinations and telephone interviews of key personnel at Tether and its banks.”
The report did not disclose the names of the banks and also stated “FSS did not, as part of the Engagement, arrive at any conclusions as to Tether’s compliance with applicable laws and regulations in any jurisdiction.” It also pointed out that Eugene Sullivan, a former federal judge and FSS co-founder, is an advisory board member of one of Tether’s banks.
Reuters reports that Tether hired FSS in March and says it is now in discussions with auditors for a full audit.
The University of Texas report, from two Department of Finance academics, John Griffin and Amin Shams, set out to investigate “whether Tether, a digital currency pegged to US dollars, influences Bitcoin and other crypto-currency prices during the recent boom.”
Griffin and Shams saw that major Bitcoin purchases made with Tether followed “market downturns and result in sizeable increases in Bitcoin prices.”
The correlation between Tether transactions and “meteoric rises” in the price of Bitcoin, wrote the academics, “cannot be explained by investor demand proxies” but instead seem to indicate that Tether is being “used to provide price support and manipulate cryptocurrency prices.”
Stuart Hoegner, the general counsel for the Bitfinex crypto exchange, that shares investors and management with Tether, told Reuters that “these allegations of manipulation are … just completely misplaced.”
At the end of 2017, the US Commodity Futures Trading Commission reportedly sent subpoenas to both Bitfinex and Tether, although none of the parties involved has ever formally confirmed this.
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