Consumers’ Research Group Raises Concerns Over Stablecoin Issuer Tether’s Lack of Transparency

The report included an open letter to state governors, radio advertisements, and a dedicated website outlining the group's concerns.

Stablecoin issuer Tether has once again come under fire for its alleged lack of transparency. On September 12, consumer protection group Consumers' Research released a report and open letter to state governors expressing concerns over the stablecoin company.

The report, which also includes radio advertisements and a dedicated website, alleges that Tether has never provided a full audit of its U.S. dollar reserves from a reputable accounting firm. Some of the group's other stated concerns include Tether’s past dealings with “questionable entities” and the use of USDT in attempts to bypass international sanctions.

Consumers' Research went on to compare the situation with Tether to the recent collapse of FTX and Alameda Research, both of which were also criticized for having similar transparency issues.

The report also highlights a list of what it claims to be false statements made by Tether throughout history, beginning in 2018, when the stablecoin firm released a report — not an audit — from a law firm, not an accounting firm.

However, the issue appears to be more complicated. For example, there have been frequent claims from auditors being hesitant to work with Tether, especially the Big Four (Deloitte, PwC, EY, and KPMG). According to Tether CEO Paolo Ardoino, these auditors are afraid to engage with the stablecoin issuer as it will “hurt” their brand.

In other words, Ardoino argues that Tether is not audited by any major firm because the firms themselves don’t want to. As it stands, Tether only gets monthly proof-of-reserves from BDO Italia, but these are attestations and not proper audits, essentially delivering a “trust me, bro” message to USDT users.

Despite this, Tether does appear to be making some efforts to increase transparency, such as hiring former Chainalysis chief economist Philip Gradwell to produce USDT usage reports and working with law enforcement to combat illicit activities involving USDT.

Related: Tron, Tether, and TRM Labs Team Up to Fight Crypto Crime on Tron Blockchain

In one recent development, Tether announced the creation of a financial crime unit in collaboration with Tron to identify and freeze illicit transactions on the Tron network, further emphasizing its commitment to security.