Tether Parts Ways With Audit Firm Friedman LLP, Confirms Relationship to be ‘Dissolved’

In what seems to be a worrisome move in the cryptocurrency market, Tether - the issuer of dollar-linked cryptocurrency USDT has announced that it has parted ways with its audit firm Friedman LLP after a feud going between two companies.

In recent reports, Tether spokesperson confirms the suspicion of online sleuths which raises a lot of questions about the company’s finances. It isn’t clear who decided to actually part ways but the statement reads:

“We confirm that the relationship with Friedman 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. 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.”

Tether receives deposits from investors in U.S Dollar and issues an equivalent number of Tether tokens on 1:1 basis to the depositor. Tether claims that it has $2.2 billion in its bank accounts to back all the tether tokens released in the market. However, the audit reports don’t actually confirm the backing of those reserves.

A lot of questions have been raised on the operations of Tether in the recent past and many doubt whether Tether actually maintains the reserve by which it can redeem the outstanding Tether tokens on 1:1 basis.

Moreover, there have been mounting suspicions of Tether’s close ties with cryptocurrency exchange Bitfinex with whom the company shares a larger number of common customers. Since Bitfinex’s banking relationship took a hit last year, the exchange is said to have become heavily dependent on Tether to move funds in and out of the exchange.

Some speculate that Tether is issuing more token than they are backed with, and in turn supplying them to Bitfinex. The crypto exchange must be using those extra tokens as a collateral in order to create short and long positions in bitcoin market.

In what the company calls as a ‘Transparency Update’, Tether wrote: “Friedman LLP has been engaged to perform historical balance sheet audit procedures for Tether Limited. However, as the amount of Tethers in circulation has increased substantially in recent months, we have also asked Friedman to analyze our bank balances and our issued and outstanding token balance on an interim basis. Friedman agreed to perform consulting services for us in an effort to provide management with useful information concerning Tether’s cash position and Tether tokens issued and outstanding as of an interim date. Friedman was able to provide consulting services for us on an expedited basis, using a procedures date of September 15, 2017. These consulting services do not constitute an audit or attestation engagement, which would include a significantly expanded scope of procedures and take substantially more time to complete.”