Tether (USDT) may be backed with cash after all - and, hypothetically, allow for withdrawals. The presence of $2.55 billion, a sum matching issued and active USDT tokens, has been witnessed by the law firm of former FBI Director Louis Freeh.
Freeh Sporkin & Sullivan LLC gained access through bank assistance and interviews to accounts belonging to the Tether issuer. The firm was careful to point out this is still not a complete audit, but only a snapshot of the funds as of June 1. Until now, the Tether issuer has not hired an auditing firm.
“The bottom line is an audit cannot be obtained,” said Stuart Hoegner, Tether’s general counsel, for Bloomberg.
He explained the lack of an audit by the unwillingness of big firms to deal with crypto asset companies.
The FSS research was completed without the knowledge and permission of the Tether issuer, by gaining access to the company’s bank accounts. The banks that hold the funds have not been named due to confidentiality restrictions.
“Despite speculation, we have consistently stated that Tether is backed by USD reserves at or exceeding the Tethers in circulation at a given moment, and we’re glad to have independent verification of this to answer some of the questions posed by the public,” said Tether Chief Executive Officer JL van der Velde.
He also believes USDT has not been used for concerted manipulation, as was suggested by Professor John Griffin of the University of Texas.
The behavior of USDT has changed in the past few weeks. Initially, the asset was concentrated on Bitcoin, creating the data patterns that led to suspicions of market manipulation. But with the proliferation of altcoins, USDT has helped fuel several active markets, including EOS, Huobi Token (HT), as well as Cardano (ADA) and other up and coming assets.
USDT also serves as a switch between exchanges, allowing for international movement of funds where banking is too expensive, or not feasible.
An additional coin, TrueUSD (TUSD) has gained fame lately, growing its supply to 62 million tokens. TUSD also relies on a third party to verify its bank accounts. TUSD allows fairly large investments to flow into the crypto markets:
“Similar to exchanges, we have set transaction limits for purchasing TrueUSD (TUSD). The current limit is $20 million. Depending on the individual or organization, larger purchases require additional KYC/AML checks such as credit score review and disclosure of source of funds. While there is no limit to the amount that can be purchased over time, we necessarily impose per day and per client limits and additional safeguards in order to protect clients against fraud and to maintain the integrity of TrueUSD (TUSD),” said Trust Token founder Rafael Cosman.
However, cashing out of Tethers remains difficult, with a long waiting period. Selling USDT for actual cash is also restricted and available only through the Kraken exchange.