Tether Review Claims Crypto Asset Fully Backed

With its auditor, Tether has finally produced a third-party report proclaiming that its cryptocurrency is fully backed by U.S. dollars - with some big caveats.

FSS, the Washington, D.C., law firm that Tether hired to assess its reserves and write the report, has no shortage of gravitas.

Another of the firm's partners, retired Judge Eugene R. Sullivan, is on the advisory board of one of Tether's banks, and was introduced to the company through that connection, according to the report.

FSS didn't tell Tether the account balances it had received from the bank for June 1 when it asked the company for sworn statements certifying the amount of USDT outstanding on that date.

The law firm also said it conducted in-person and phone interviews with senior personnel at Tether and the banks and reviewed hundreds of pages of documents.

Hoegner said the law firm had "Unfettered access" to Tether's bank balances beginning in March, even though the report only addresses the balances of one day.

Stepping back, it's important to remember that before it engaged FSS, Tether previously worked with an audit firm, Friedman LLP. That firm produced an interim report in September 2017 that found the company had $442.9 million of cash as of Sept. 15 to fully back the USDT tokens.

Tether said in January that its relationship with the firm had "Dissolved," without specifying which side broke it off.

A law firm's report is unlikely to carry as much weight as an audit firm's would, and not only because of the obvious difference in skill sets.

99 percent of the work a law firm does is advocacy for the client," whereas "100 percent of the work of an accounting firm is to hold themselves out as independent," Selling said.