Cryptocurrency's maker has 'history' of 'false claims,' 'deliberate lack of transparency,' watchdog warns
'Consumers should be wary of trusting actors like Tether who have a history of false claims and a deliberate lack of transparency,' Consumers' Research says
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Consumers' Research group is sounding an alarm to the public about the cryptocurrency "stablecoin" known as Tether, calling it an unregulated currency threat that undermines U.S. financial controls, something Tether's administrators strongly deny.
"Tether has been promising that it would conduct a full audit for years but has still failed to do so," executive director Will Hild told Fox News Digital in a statement.
"Until a credible third-party auditor can verify their claim of 1:1 U.S. dollar backing and that they have sufficient financial controls in place, consumers should be cautious about investing their money with them," Hild said.
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Smartphone with Tether logo is placed on displayed U.S. dollars in this illustration taken, May 12, 2022. REUTERS/Dado Ruvic/Illustration (Reuters Photos)
"Consumers should be wary of trusting actors like Tether who have a history of false claims and a deliberate lack of transparency," Hild said.
Hild will also be sending a letter and a consumer warning to every governor across the country "warning them about the dangers of Tether and asking them to take steps to protect their constituents from financial harm" on Friday, Fox Business has learned.
Tether disputes Hild's assertions, however.
Tether responded to Fox Business after the original publication of this article with several points that it says rebuts the criticism of the company.
Tether pointed to numerous previous attestation reports, one of which notes that "part of the profits of the second quarter were reinvested in strategic projects to support the ecosystem while maintaining a sizable amount of excess reserves ($5.3 billion) to further the stability of our token."
Company CEO Paolo Ardoino previously described yet another attestation report as underscoring "our commitment to transparency, stability, and responsible financial management."
The attestations were conducted by BDO, a top global accounting firm.
Tether also notes that it publishes daily transparency updates and maintains relationships and "actively collaborates" with U.S. and international law enforcement.
For its part, Consumers' Research is sending off a digital radio ad blitz sounding the alarm on the purported risks of Tether, as well as a website, TetherWarning.com
The letter comes as the Wall Street Journal reported this week that Tether – creator of the USDT stablecoin – facilitates a parallel economy that operates beyond the oversight of U.S. law enforcement. According to the article, "A giant unregulated currency is undermining America’s fight against arms dealers, sanctions busters and scammers. Almost as much money flowed through its network last year as through Visa cards. And it has recently minted more profit than BlackRock, with a tiny fraction of the workforce."
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Representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland on November 14, 2022. ((Photo by Jakub Porzycki/NurPhoto via Getty Images) / Getty Images)
As of May 1, 2024, Tether has reported holding $6.3 billion in excess reserves, despite never having undergone an audit according to international accounting standards. The company also disclosed a profit of $4.52 billion for the first quarter of 2024.
In 2021, Tether and and crypto exchange Bitfinex found itself in hot water after they were ordered to pay $42.5 million to settle civil charges from the U.S. Commodity Futures Trading Commission (CFTC) over allegedly making misleading statements and making illegal transactions.
Firms doing business as Tether agreed to pay $41 million to resolve CFTC charges they made misleading claims about Tether's cryptocurrency stablecoin, the CFTC said at the time. According to the regulator, at various times from June 2016 to late February 2019, Tether made misleading or untrue statements about whether it held sufficient U.S. dollar reserves to fully back up its U.S. dollar tether token.
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An illustration picture taken in London on May 8, 2022, shows gold plated souvenir cryptocurrencies. (JUSTIN TALLIS/AFP via Getty Images / Getty Images)
As such, the research group's letter also suggests implementing some regulatory frameworks to safeguard consumers from fraud while encouraging the integration of cryptocurrency into the financial system.
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This week, Tether joined other cryptocurrencies, Tron and TRM Labs to combat crypto crime and formed what is now known as the T3 Financial Crime Unit, Forbes reported.
Reuters contributed to this report.