Tether Bank Accounts have Excess Balance than USDT in Circulation: Freeh Investigation Report

Tether (USDT) that 10 largest “coin” according to Market Capitalization, has excess dollars in its bank accounts that the USDT in the circulation as on June 1, 2018, concluding USDT is completely backed. Tether which is considered a stable coin claims that its 1 USDT = 1 USD.

The coin has been in controversy as its name surfaced, along with BitFinex, in a report which claimed that the USDT was used to manipulate the Bitcoin prices in December 2017, which lead to the rise in bitcoin hovering over USD 20000.

Freeh report of transparency of Tether a matter of debate

Tether limited had hired former FBI director, Louis Freeh private law, an investigation firm, Freeh Sporkin & Sullivan LLP(FSS) to gain back trust from the cryptocurrency community and also reassure investors that its cryptocurrency is backed by U.S. dollars. As its controversy regarding BTC price manipulation grew, Tether has been marred by rumours that the dollars, which the company claims to be holding in its reserve to back the USDT, isn’t actually there — a concern that persisted among skeptics even after an accounting firm, Friedman LLP, did an analysis last year of Tether’s finances similar to this new review.

FSS picked June 1 as the day to analyze without Tether’s knowledge, It was given online access to Tether’s bank accounts, statements and to employees at the financial institutions. Pursuant to the monitoring and review, the official report stated that

“Pursuant to the terms of Engagement, and the discretion provided by Tether, FSS selected the date of June 1st,2018, and received the following balance information from Tether’s two banks as of the close of the banking day. FSS received the following confirmations from the respective banks by sworn and notarized statements provided by duly authorized personnel.

  • BANK 1: $1,968,538,584.82 USD (unencumbered)
  • BANK 2: $576,528,652.00 USD (unencumbered)
  • TOTAL: $2,545,067,236.82 USD”

The report also noted that, According to Tether’s transparency page (https://wallet.tether.to/transparency), the amount of fully-backed USD Tethers in circulation as of June 1st, 2018 was equal to $2,538,090,823.52 USD Tethers This meant that the company had a cushion of around USD 7 million in excess.

Although the report was in favour of Tether, it was taken up controversially by the community as skeptics stated that since tether had hired Freeh Sporkin & Sullivan LLP(FSS) to conduct this investigation, the complete legitimacy and transparency of the report was questioned, even though FSS stated had they had not given any advance notice to the company regarding their investigation date.

Tethers and Bitfinex price manipulation controversy

The concerns around Tether came to light when Bitfinex and Tether together got into deep controversies associated with Bitcoin price manipulation. It was claimed by two researchers of the University of Texas at Austin, namely, John M. Griffin and Amin Shams that the Bitcoin prices were artificially inflated in December when the digital gold reached its all-time high at almost $20,000.

Griffin, who is known for catching fraud in financial markets reveals several distinct patterns in trading that suggest several people or a person at the major cryptocurrency exchange Bitfinex inflated virtual coin prices.

The 66-page report, which was titled,

“Is Bitcoin Really Un-Tethered? “stated that Bitfinex might have used the virtual coin Tether, which it owns, to generate fake demand for bitcoin by buying up the virtual currency and keeping its price up while it sank at other exchanges. The paper found that the more Tether entered the market, the higher cryptocurrency prices would rise, “similar to the inflationary effect of printing additional money.”

In December, the US Commodity Futures Trading Commission subpoenaed Bitfinex and the company Tether, after investors expressed concerns over these very same price manipulation issues. In January, reports of the subpoena began to surface, as did news that Tether had dissolved its relationship with an audit firm it had hired for an internal audit. Recently, Bloomberg reported that the Department of Justice is working with the CFTC to investigate bitcoin and price manipulation, although that investigation is still in the early stages.

As skeptics have already raised their voices on the fairness of the report by putting forward by Freeh, the community will definitely not be completely pleased with it. Although the credibility of Louis Freeh also cannot be questioned as his past records say that he has been a fair judge irrespective of who hires him, the government or the party under question. For now, the debate is on

Do you think people will agree to Freeh’s finding and lay their trust on Tether again? Do let us know your views on the same.

The post Tether Bank Accounts have Excess Balance than USDT in Circulation: Freeh Investigation Report appeared first on BitcoinLinux.

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