Tether, the most controversial stablecoin, is trapped in a fresh controversy again. This time, the stablecoin is being criticized for silently revising the details of the USDT token and excluding the term ‘fully USD backed’ from the details.
No Independent Proof of Supporting Claims
The stablecoin, in the earlier terms, had a USD backing at a ratio of 1:1. However, these claims were never welcomed in the crypto circles. Tether has never released an audit report from an independent audit organization as proof of backing.
With the new terms, the stablecoin seems to have backed with other things other than USD.
Tether’s new terms on the website state –
“Every Tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”
Tether has been holding to a document from a law firm, Freeh, Sporkin & Sullivan LLP, which seems to be agreeing with Tether’s claims that each USDT has $1 support. However, the document can’t be completely trusted seeing that the law firm added some paragraphs acknowledging that they are not an accounting company and didn’t follow “generally accepted accounting principles.”
Tether’s change of terms has been met with resistance. A respected crypto analyst and investor, Tuur Demeester was one of those who read the mischief in the new statement.
The analyst noted –
“Slippery language by Tether. ‘100% backed [to] ‘may also include receivables from loans issued.’ This is a clear transition from full to fractional reserve banking… My concern is mainly about the precedent that this change in terms is setting: it opens the door to potentially start investing Tether’s reserve in assets that are illiquid or hard to value.”
However, Tether has stood its ground regarding its change of terms. Tether’s general counsel, Stuart Hoegner, said –
“We generally don’t comment on the specific composition of our reserves, but this change in optionality reflects the growth of Tether and the growth of the stablecoin industry.”
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