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Tether is still lying to you

The Tether Playbook is simple: anytime there is a suspicion that the Tethers are fully supported, post irrelevant non-evidence in the hopes that it will spark enough premature celebrations on social media to move the reality forward to the public Misled, the headlines have already been written and everyone has moved on to the next scandal. In fact, Tether becomes a handyman who promises to take an exam that shows his stablecoin is fully secured and then does everything in his power to avoid that very thing.

This is exactly how Tether’s latest attempt at justification played out. Undoubtedly concerned about the public perception of the New York attorney general’s damning announcement last month, Tether released a consolidated reserves report along with a “confirmatory opinion” issued by an accountant. Those two things taken together show, according to Tether, that they are not lying about Tether always being fully supported.

In reality, they don’t do that. The Consolidated Reserves Report was prepared by Tether and includes the amount of assets and liabilities on Tether’s balance sheet as of February 28, 2021, as well as a confirmation that the amount held in reserve by Tether at that time exceeds the amount required to repay the number of issued cable. No information is given as to the composition of Tether’s assets, liabilities or reserves.

The auditor’s report only confirms that the statements made in the February 28 report on Tether’s holdings are correct – that is, on February 28, the amount of assets held by Tether has exceeded its liabilities and the reserves held by Tether have been sufficiently over to cover the number of restraint straps issued at the time. The statement of the accountant himself makes this beyond doubt:

“Our opinion is limited to that only [Consolidated Reserves Report] and the corresponding consolidated total assets and total assets as of February 28, 2021 million at 23:59 UTC. Activities before and after this time and date were not taken into account when testing the balances and information described above. Furthermore, we have not performed any procedures or provided any level of security for the financial or non-financial activity on any dates or times other than those specified in this report. “

As you read this, those familiar with the New York Attorney General’s investigation will know to immediately ignore this latest Tether charade. Upon completion of the investigation, NYAG fined Tether $ 18.5 million, banned operations in New York, and determined how Tether had lied to justify its full support claim. Specifically, the investigation found that Tether would have their bank accounts “verified” by accounting firms, inflate the account with cash on the day of verification, and depopulate the account soon after:

“The OAG investigation revealed that by mid-2017 at the latest, Tether had no access to banking operations around the world and therefore did not hold any reserves for certain periods of time to secure the cables in circulation at the price of one dollar per cable, contrary to his representations. Amid ongoing questions as to whether the company actually had adequate funds, Tether released a self-proclaimed “review” of its cash reserves in 2017, which was deemed to have been “acted in good faith on our behalf, an interim analysis of our cash position. ‘In reality, however, the money supposedly backing the tapes was not deposited into Tether’s account until the morning of the company’s’ verification’. “

The self-proclaimed review mentioned here took almost exactly the same shape as this most recent confirmatory opinion. Tether tried again in 2018:

On November 1, 2018, Tether released another self-proclaimed ‘review’ of its cash reserve. This time at Deltec Bank & Trust Ltd. in the Bahamas. The announcement was based on a letter dated Nov. 1, 2018 that stated the cables were fully cash backed at one dollar per cable. The very next day, November 2, 2018, Tether began transferring funds from its account, eventually moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. As of November 2, 2018 – one day after their last “review” – the Tethers were no longer one-to-one covered by US dollars in a Tether bank account. “

As in the present case, this “evidence” offered by Tether was related to the increasing demands for a full audit and was accompanied by much fanfare and solemnity from Tether staff, particularly General Counsel Stuart Hoegner, who was fooled by speaking Tether insisted on being 100% USD backed in the early days of the business and has since backed down, apparently subsiding and flowing with every version of events that Tether believes can get through at this point. For example, when Hoegner filed an affidavit for the NYAG investigation in April 2019, Hoegner was told that only 74% of Tethers were endorsed. Now we seem to be 100% back – what you imagine will change again the next time a Tether employee is asked about it under oath.

We are aware of an anonymous medium post entitled “The Bit Short: Inside Cryptos Doomsday Machine”. The post is full of falsehoods, inventions and theories that have already been debunked. @ Tether_to tokens (USDt) are the most fluid, stable and trustworthy stable coins, … 1/4

– Stuart Hoegner (@bitcoinlawyer) January 31, 2021

As revealed on the SomethingAwful forums and shared by author David Gerard in his criticism of the situation, a third party attestation contains a disclaimer that Tether’s accounting policies are to store its assets and liabilities at historical cost To evaluate contrary to the realizable value. This not only contradicts the current accounting standards, but is also a very noticeable inclusion in a report that is otherwise hardly detailed. This would suggest that a not inconsiderable proportion of Tether’s assets come from digital assets (in fact, digital assets are the only class of assets specifically referred to in either Tether’s report or third party attestation The question arises as to whether these might contain assets from the many coins that have collapsed in value over the years.

Blotto_Otter in the “SomethingAwful Buttcoin” thread found this out via the Tether audit: Moore believes that Tether misevaluates their claimed reserves, and Moore felt that they should consider this in the certificate. pic.twitter.com/0Fly0ZuZpI

– David Gerard @ 🌷 (@davidgerard) March 30, 2021

Despite everything, the latest version of Tether is not an audit. As the author David Gerard pointed out in his review:

An actual audit would test a few other things. Just to start with:

  • Look for unreported liabilities – don’t just take Tether at their word.
  • Check that the assets … are there.
  • Verify that the assets are actually owned by Tether.
  • Check the reserve assets over time – to make sure Tether can’t pull the wool over the accountants’ eyes like it did in 2017.
  • Verify that Tether’s accounting policies do in fact correctly account for assets and liabilities.
  • Check the valuation of the assets that Tether is claiming in reserve – and the Tether will value them correctly.

Just like the previous “certificates” offered by Tether, the document released this week is not an exam, and it certainly says nothing about the endorsement. At this point, it is also insufficient for Tether to provide evidence that they have managed to focus on full support. Her history has changed so many times, and Tether has made conflicting claims about her reserve at various points, that the only certainty is that Tether has lied for much of his history – the question is which claims, if any, were true .

It’s not just that Tether has not yet provided evidence that it is fully supported and by what – it’s that Tether has again tried to mislead us with non-evidence in the hope that their assurances will enough premature partying on social media makes front run reality. The whole strategy can be seen by comparing Tether’s press release concluding the Attorney General’s investigation with the NYAG announcement itself – they might as well describe two different events. Yet this tactic works, judging by the number of headlines Tether seem to take at their word on their last “certification”.

Of course, we know exactly what Tether needs to prove that his token is fully backed by currency holdings: a full independent review conducted by a qualified accountant. Tether knows that too, which is why we didn’t get any of these.

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