Given the proliferation of proof-of-reserve reports and their consistent mischaracterizations in the crypto-ecosystem, the Public Company Accounting Oversight Board's (PCAOB) Office of the Investor Advocate has warned investors that while crypto companies may use PoR reports to bolster consumer confidence, they are not formal, rigorous audits, do not provide “any meaningful assurance to investors and the public,” and are not conducted using uniform audit standards. Hence, any iteration of attestation is essentially useless as a proof of bonafides, especially as a matter of due diligence.Īlong the same lines, attestations are akin to so-called "Proof-of-Reserve" (PoR) reports, which are similarly misleading marketed as actual audits. It is an “unverified snapshot,” which would never pass any sort of regulatory muster.Īudits are methodically designed to look for potential risks, while attestations only evaluate whether the data being examined by the “attestator” is accurate at that precise moment in time. Under any circumstance, an attestation report is not the same as an audit report. That means that Tether apparently no longer has any legal obligation to submit attestations, quarterly or otherwise. Moreover, the last quarter for which Tether is required to legally submit to attestations of its reserves, as dictated by the Attorney General of New York, has passed. Tether only offers “attestations,” not audits, previously from a random 5-person Cayman Islands firm, and then from BDO Italia, an independent firm of BDO International. This is what those in the business of investigating fraud would call a "red flag." Yet those reserves remain unaudited, unconfirmed and therefore dubious, leaving Tether's customers to grapple with Tether's remarkably condescending and ineffective public relations blather, hype and bluster. Tether’s fundamental business, the essence of everything Tether does, is tied exclusively to Tether’s financial reserves. In fact, there seems to be no existing stablecoin-related U.S. requirements on how reserves must be invested, nor any requirements for audits or reporting. Stablecoins like Tether face no regulatory constraints. It’s been over a year and a half since Hoegner made that promise. ![]() We last heard from Tether about an audit when Paolo Ardoino, the Chief Technology of Tether (and spokesperson for all things financial at Tether), and Stuart Hoegner, General Counsel at Tether sister company Bitfinex, appeared on CNBC to discuss the their use of so-called attestations. The interview was a disaster of double-talk, equivocation and caginess with non-denial denials overwhelming the majority of the discourse and Hoegner promising a full audit of the Tether reserves in a matter of “months, not years.” You can still find the tweet, in which Tether claims to have partnered with blockchain company Factom, even though Tether reportedly never worked with Factom at all. The first time Tether told a live, public audience it was going to get an audit was on March 9, 2015. Tether, the first stablecoin, apparently headquartered in Road Town, Trinity Chambers, British Virgin Islands, has spent seven years promising transparency, credibility and audits.
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