Is this attack on Tether part of The Wall Street Journal’s general campaign against bitcoin and crypto? Or did the newspaper feel the impulse to get in on the Tether FUD action a few months too late? Did Tether competitors pay for this article or is it an organic piece of journalism? The WSJ article titled “Tether Says Audit Is Still Months Away as Crypto Market Falters” elicits several questions. Tether’s answer even more so.
And we’re here to analyze both.
The Wall Street Journal’s No Mercy Attack
The newspaper starts its investigation with obvious truths, “Market observers have long questioned whether the firm’s reserves are sufficient and have been demanding audited information.” Nobody can dispute that. “The company has been promising an audit since at least 2017. An audit is “likely months” away, said Paolo Ardoino, chief technology officer of Tether Holdings Ltd.”
However, the company puts out a reserve report every now and then. Does it not? Well, the WSJ differentiates what we get from what is needed.
“Instead of a full audit, Tether, like other leading stablecoins, publishes an “attestation” showing a snapshot of its reserves and liabilities, signed off by its accounting firm.”
And quotes this violent statement by John Reed Stark, former head of internet enforcement at the Securities and Exchange Commission.
“Tether needs an audit that’s akin to a corporate colonoscopy, that tells investors everything about what’s in their reserves.”
How can Tether recover from this? Keep reading to find out.
Perceived Problems With Tether’s Accounting
Where you aware of the recent changes in Tether’s institutional partners?
“In July, Tether switched accountants, from a small Cayman Islands-based firm to BDO Italia, the Italian member of the global BDO network. That firm, though, is a separate legal entity from BDO in the U.S.”
Well, in the article “Tether Responds to Disinformation in WSJ Article,” the company strongly supports the institution.
“BDO, a very reputable and independent Top 5 audit firm, is not a “Tether accounting firm”, as erroneously written by the WSJ. BDO will continue to have unrestricted access to any relevant information to perform their work and Tether will continue to share its attestations, despite continuous attempts by the media to disparage its reputation.”
However, the WSJ perceives imprecision. Their major problem seems to be with the fact that Tether has undisclosed cryptocurrencies as part of its reserve, and we all know how volatile those are. According to the newspaper, this is a risk because Tether’s accounting cuts it too close to insolvency.
“On Aug. 25, its $67.7 billion of reported assets outweighed its $67.5 billion of liabilities by just $191 million, according to its website. That means a 0.3% fall in assets could render Tether technically insolvent.”
Tether’s response to this is not a denial. “To attack Tether’s reserves, when this margin also applies to other stablecoins on the market, further highlights an agenda by the publication,” their article says. According to Tether, the WSJ’s article’s aim is to damage the company’s reputation. A hit piece, no more no less. Plus, they insinuate they’ve been under attack and resisting
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