Tether has said an audit of its finances, meant to assure of its stability, could still be months off, according to Chief Technology Officer Paolo Ardoino.
Without the basic financial guardrails in place to help protect the funds, crypto companies are having issues showing investors their money is safe, The Wall Street Journal reported Saturday (Aug. 27).
Crypto firms don’t always publish financial statements and many don’t have anyone checking their books — so even when they’re audited, there’s no agreed standards for the digital assets.
One such case is Tether, which rolled out an array of blogs and press releases to promote its transparency in the wake of numerous crypto firm failures earlier in the year.
The company has faced questions before about whether its revenues are sufficient enough, and the Journal noted that Tether has been promising an audit since 2017. Tether’s practice thus far has been to publish an “attestation” that shows a snapshot of its reserves and liabilities, signed off by an accounting firm.
However, audits are usually more thorough, and some crypto companies’ attestations sign off on the numbers provided for specific dates and times, without testing transactions before or after — making some attestations more positive than the reality of the situation.
Tether had recently hired auditing firm BDO Italia to help it provide monthly reports on its reserves, PYMNTS wrote.
See also: Has Tether Turned the Corner on Reserve Doubters?
But there are still questions about whether that was a good enough step to help soothe concerns that had investors dropping $10 billion worth earlier in the year, when the Terra/LUNA stablecoin was collapsing.
Tether then saw its market capitalization falling from $83 billion to around $66 billion, though Circle and Coinbase’s USD Coin saw its value grow to $65 billion. The common belief is that many investors got rid of USDT for USDC, particularly with Tether’s stablecoin losing its peg for two months.
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