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Dollar-backed cryptocurrency hires law firm to verify its $2.5 billion cash reserves

Tether US Dollar Cash Reserves

Recent research showed that Bitcoin’s all-time high price might have been increased artificially with the help of Tether, a cryptocoin that should never increase in value relative to the dollar. That’s because a real dollar should be held up in a bank for each Tether coin in circulation at exchanges. At the time, we told you that the company behind Tether never proved that it has cash reserves to match all the Tethers out there, and this particular controversy precedes last week’s research.

Fast-forward to Wednesday, and Tether Limited announced that as of June 1st it had more than $2.54 billion in cash deposits, exceeding the 2.53 billion Tether tokens out there.

The company said in an announcement that US law firm  Freeh Sporkin & Sullivan, LLP (FSS) is the legal entity that actually confirmed its cash reserves.

Tether Limited explained that it hired the Washington, DC-based firm in March to conduct an independent review of its bank account balances. The firm was then granted full access to all relevant bank and account documents and selected a random rate for review without Tether’s knowledge or involvement.

According to the company, the firm found that on June 1st, 2018, found that bank balances totaled $2,545,067,236.82, significantly above the $2,538,090,823.52 worth of USDTs in circulations.

The law firm was co-founded by former FBI director Louis J. Freeh, according to Reuters, which gives the report even more credibility.

However, this isn’t a full audit of Tether. And it’s still peculiar that the law firm decided to choose only one arbitrary date for verification. The firm did say that it received sworn and notarized statements from Tether’s banks and that it conducted “comprehensive examinations and telephoned personnel at Tether and its banks.”

“FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018,” the report said.

That said, the fact that Tether is backed by real cash doesn’t disprove the study that says Bitcoin has been propped up over the last year by Tether.

Furthermore, the U.S. Commodity Futures Trading Commission and the Department of Justice are investigating whether Bitcoin is being manipulated. The same CFTC sent a subpoena to Tether and Bitfinex in December, but it’s unclear whether either company is under investigation also. The contents of the warrant haven’t been shared with the press.

Chris Smith has been covering consumer electronics ever since the iPhone revolutionized the industry in 2008. When he’s not writing about the most recent tech news for BGR, he closely follows the events in Marvel’s Cinematic Universe and other blockbuster franchises. Outside of work, you’ll catch him streaming almost every new movie and TV show release as soon as it's available.