Tether recently announced that it has ended its relationship with its auditors, due to some concerns about the company taking too long during the auditing process.
In a statement released this weekend, Tether explained that it has decided to dissolve its relationship with Friedman LLP.
Tether went on to say, “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.”
This sudden stop to the audit will probably cause people who are already critical of the digital money to become even more suspicious of its backing.
Tether has produced a cryptocurrency named USDT that is linked to, and reportedly backed by, the U.S. dollar. Its purpose is to operate as a “stablecoin”, a form of digital money that allows an individual to avoid the type of volatility that many cryptocurrencies like Bitcoin are dealing with, but still have the functionality of a cryptocurrency, such as sending it to digital wallets and exchanges.
Tether experienced a $31 million theft back in November. That heist led to online speculation that Tether, which is closely connected to the cryptocurrency exchange Bitfinex, is dealing with deeper problems in regards to its solvency. The press has voiced concerns about the way in which Tether is managing its cryptocurrency.
Shortly after that attack, the New York Times wrote, “One persistent online critic, going by the screen name Bitfinex’ed, has written several very detailed essays on Medium arguing that Bitfinex appears to be creating Tether coins out of thin air and then using them to buy Bitcoin and push the price up.”
Following that article, Bloomberg recently wrote, “Among the many mysteries at the heart of the cryptocurrency market are these: Does $814 million of a digital token known as Tether really exist?”
The article voiced suspicions that Tether may not hold the dollar reserves that it claims to have. The company continues to maintain that the criticism is unnecessary and baseless, and has promised that an audit of its books would prove it.
This weekend Tether explained, “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.”
So far, the company has not shared if it has hired another auditor to take the place of Friedman LLP.