- Tether, hit by $31 million hack in November, has built a cryptocurrency pegged to the dollar.
- Critics are suspicious of whether it has dollar reserves it claims, but Tether calls scepticism “uninformed and baseless.”
- The company has now parted ways with its auditor, which was reviewing its holdings, blaming auditor’s “the excruciatingly detailed procedures.”
LONDON – Under-fire cryptocurrency company Tether has parted company with its auditors, according to CoinDesk.
CoinDesk reports that Tether said in a statement on Saturday night that its relationship with Friedman LLP “is dissolved.”
“Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame,” Tether said in the statement.
The ending of the audit is likely to fuel critics of the cryptocurrency, who are suspicious of its backing.
Tether created a cryptocurrency called USDT that is pegged to – and supposedly backed by – the dollar. It is meant to function as a “stablecoin” – a cryptocurrency that allows you to avoid the volatility of bitcoin but still have the operability of a cryptocurrency (i.e. being able to send to digital wallets and exchanges.)
The cryptocurrency was hit by a $31 million heist in November. The attack led to online rumours that Tether, which is closely linked to cryptocurrency exchange Bitfinex, is facing deeper issues around its solvency. The press has also raised questions about Tether’s handling of its cryptocurrency.
The New York Times wrote shortly after the hack: “One persistent online critic, going by the screen name Bitfinex’ed, has written several very detailed essays on Medium arguing that Bitfinex appears to be creating Tether coins out of thin air and then using them to buy Bitcoin and push the price up.”
Bloomberg wrote earlier this month: “Among the many mysteries at the heart of the cryptocurrency market are these: Does $814 million of a digital token known as tether really exist?” The article highlighted suspicions that the company may not hold the dollar reserves to back Tether that it claims to.
Tether has called this criticism “uninformed and baseless” and promised in a statement in December that Friedman’s audit of its books would vindicate the company.
“We understand that the public is anxiously awaiting the completion of this process, but it cannot be rushed and we are not Friedman’s only customer,” the company said in December. “Moreover, the amount of due diligence that is being performed by Friedman is substantial.”
Tether said in its Saturday statement to CoinDesk: “As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.”
Business Insider contacted Tether for clarification of when it parted ways with Friedman LLP and whether it has hired a new auditor. The company did not immediately respond to our request for comment.