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Tether Execs Bat Away CNBC Questions on USDT’s Lack of Transparency

Written by:
Aaron Goldstein
Published on:
Jul/23/2021

What's the future of Tether?  A trainwreck of an interview on CNBC the other day may shed some light.

CNBC TechCheck’s Deirdre Bosa chatted with Tether’s CTO Paolo Ardoino and General Counsel Stuart Hoegner about the company role in crypto and the future of stablecoins.

CoinGeek's Analysis of the Interview

  • Steven Stradbrooke of CoinGeek suggests that the fact that Ardoino and Hoegner took part at all is notable in and of itself, as the pair generally prefer to give interviews only to obscure vloggers with audiences in the dozens.
  • Stradbrooke suggests the 30-minute segment could ultimately give rise to a new acronym, FABNAQ (frequently asked but never answered questions).
  • He also notes that regulators appear to be losing patience with the digital currency sector’s aversion to oversight. 
  • Hoegner claims that an audit "is in the works".
  • Bosa noted that Tether previously utilized U.S.-based Friedman LLP as its auditor before that relationship ‘dissolved’ in January 2018 due to Tether’s unhappiness with Friedman’s “excruciatingly detailed procedures.”
  • Stradbrooke quipped that Hoegner claimed Tether execs were “leaders in transparency,” despite the prevailing view that the only thing Tether and transparency have in common is the letter ‘t’.

Some Food for Thought

While watching this interview, Stradbrooke advises readers of something they should keep in mind.

"The New York AG’s probe of Tether found that the company had a habit of ‘borrowing’ nine-figure sums from sister company Bitfinex the day before asking an accountant to verify that the cash in Tether’s bank accounts matched the issued value of USDT. The day after that verification, Tether would transfer the sum back to the Bitfinex exchange and the shell game resumed. We suppose you could argue this was transparently dishonest, so we grudgingly concede the point to Hoegner."

Tether Liquidity Not All That Wet

Stradbrooke questions Tether's liquidity as well.

"Hoegner claimed his company had “never refused a redemption by a Tether customer,” but Tether’s T&Cs permit redemption only to a ‘verified customer,’ aka exchanges and OTC traders. End users need to find a willing buyer on an exchange to convert USDT to anything usable in the real world. Furthermore, Tether reserves the right to delay withdrawals or redemptions depending on the “illiquidity or unavailability or loss” of any of Tether’s sketchy reserves.

"On that note, Hoegner’s attempt to set viewers’ minds at ease regarding those reserves went somewhat awry when he claimed that Tether had enough cash on hand to cover “our biggest 24-hour period of redemptions.” Hoegner appeared utterly unaware that bragging about having one whole day’s worth of liquidity on hand is perhaps not the greatest selling point for a financial institution boasting a $62 billion market cap."

- Jagajeet Chiba, Gambling911.com

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