Tether is a cryptocurrency that's supposedly pegged 1-to-1 with the US dollar. In theory, this means that for every Tether in circulation, there's a real dollar sitting in a bank account somewhere, backing it up. Sounds pretty straightforward, right?
Here’s the catch: Tether has never been audited. And why? Apparently, none of the Big Four accounting firms are willing to touch it with a ten-foot pole, citing "potential reputational risks." That’s according to Tether's CEO, Paolo Ardoino.
But I’m skeptical. If Tether is truly backed 1-to-1 by US dollars, they should be able to get an audit. Even if not by a Big Four firm, they could get a Top 100 firm to do it.
Instead, we've seen quarterly "attestations" from a small Italian accounting firm affiliated with BDO. They’re not audits, and I wouldn’t rely on them.
And let's not forget that Tether has admitted that they lend out their reserves, which means that Tether is not even fully backed by USD. They're acting like a bank but without any regulation or oversight.
The lack of transparency is staggering. And yet, despite all the skepticism and the astronomical sums of money involved, Tether continues to operate without a proper audit.
In my opinion, this is a ticking time bomb. If Tether can't prove they have the reserves to back up their coins, we could see a catastrophic collapse that would make the FTX implosion look like a minor blip.
So, what can we do? Accountants must demand transparency and accountability from Tether and other stablecoin providers. We need to push for proper audits and regulatory oversight to ensure these entities operate above board and don’t put the financial system at risk.
But hey, that's just my two cents. What do you think? Is Tether a disaster waiting to happen, or am I just being a wet blanket? Let me know in the comments below, and don't forget to tune in to The Accounting Podcast for more hot takes.
