{"id":19086,"date":"2021-03-30T17:21:26","date_gmt":"2021-03-30T17:21:26","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=19086"},"modified":"2021-03-30T17:21:26","modified_gmt":"2021-03-30T17:21:26","slug":"tether-produces-a-new-attestation-it-says-nothing-useful","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2021\/03\/30\/tether-produces-a-new-attestation-it-says-nothing-useful\/","title":{"rendered":"Tether produces a new attestation \u2014 it says nothing useful"},"content":{"rendered":"

Crypto’s favourite dollar-substitute stablecoin, Tether, releases an audit of their backing reserves, the value behind each and every tether! An audit by proper accountants!<\/p>\n

Well, actually an attestation. Well, functionally a press release: [Tether<\/i><\/a>]<\/p>\n

Tether has always been fully backed, and the assurance opinion we made available today confirms it once again.<\/p><\/blockquote>\n

(The settlement with the New York Attorney General<\/a> from February details how and when that first claim was false, for what that’s worth.)<\/p>\n

The attestation was done by Moore Cayman and assesses the numbers provided by Tether in their Consolidated Reserves Report as of 11:59 PM UTC, 28 February 2021.<\/p>\n

So Tether may have been backed for a minute.<\/p>\n

 <\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

The Independent Accountant’s Report<\/h3>\n

The report is an 8-page PDF, and states: [Independent Accountant’s Report<\/i><\/a>, PDF<\/i>]<\/p>\n

Consolidated total assets amount to at least USD 35,276,327,156.<\/p><\/blockquote>\n

This matches the 35 billion tethers that had been issued as of 28 February. (There’s nearly 41 billion as I write this.)<\/p>\n

The reserves include digital assets, gold (backing the XAU tethers), and “other assets and\u00a0 liabilities”. The proportions of each of these in the reserve is not stated.<\/p>\n

Digital assets are valued at “the lower of cost or fair market value.”<\/p>\n

“Liabilities” would include loans \u2014 such as loans of tethers that are being claimed as backing for issuance of tethers, or loans to other iFinex companies.<\/p>\n

The only assets spoken of specifically are “digital assets” and gold \u2014 the words “bank”, “cash”, “currency”, “currencies” or “deposit” don’t appear.<\/p>\n

That the report doesn’t detail Tether’s crypto custody arrangements is a minor omission compared to all its other issues.<\/p>\n

Attestations, audits and shenanigans<\/h3>\n

Attestations are a kind<\/i> of audit, sort of. But they don’t tell you what you want to know about a stablecoin reserve \u2014 that is, the trustworthy stability of the reserves:<\/p>\n

Our opinion is limited solely to the CRR and the corresponding consolidated total assets and consolidated total liabilities as of 28 February 2021, at 11:59 PM UTC. Activity prior to and after this time and date was not considered.<\/p><\/blockquote>\n

Remember the trick that the NYAG caught Tether pulling with this sort of attestation? Tether opened an account at Noble Bank on the morning of 15 September 2017, Bitfinex transferred $382 million into Tether’s account from their account, and then Tether showed Friedman LLC their new account balance, at 8pm that day.<\/p>\n

That’s why attestations don’t count as audits \u2014 and why attestations from Tether really<\/i> don’t count as audits, ‘cos they’ve been busted pulling literally this shenanigan before.<\/p>\n

An actual audit would test a few other things. Just for starters:<\/p>\n