Tether Audit: FSS Report States All USDT Is Fully Backed, but Can't Prove It

USD-paired stablecoin Tether released a report that indicates the company behind USDT does possess sufficient capital to back each individual token on a 1:1 basis.

The report, released in full by Tether, demonstrates that Tether held - at one point - currency reserves that match the number of USDT in circulation.

The Tether Transparency Update - FSS Report, published on June 20, states that the release of financial data is intended to directly address criticisms of the platform that have surfaced recently, including allegations of Tether-driven Bitcoin price manipulation.

Tether has remained under intense scrutiny throughout the year since the announcement that a comprehensive audit of Tether holdings, set to be executed by financial auditor Friedman LLP, would never eventuate.

The subsequent printing of an additional $300 million Tether after the cancellation of the audit raised concern with the cryptocurrency community, with many market participants expressing doubt that the platform holds sufficient reserve capital to back each Tether.

To date, Tether has not yet released any evidence that it holds sufficient capital to support the $2.6 billion market cap of USDT. The potential that Tether may lack sufficient reserves has critical implications for the crypto market, as USDT currently represents roughly 17 percent of all daily crypto trade volume.

"To address allegations head on, we wish to make a few things clear: All Tethers in circulation are fully backed by USD reserves. Full stop. Memoranda, consulting reports, industry leaders, cryptocurrency pioneers, and competitors have all confirmed this. Reserves have always, and will always, match the number of Tethers in circulation."

The report shows that at a single snapshot point on June 1, 2018, Tether held a little over 2.5 billion USD across two bank accounts.

While Tether did hold enough capital to back each USDT at one point, the report does not demonstrate that Tether has consistently secured each individual Tether issued since launch, and does not prove that each Tether is fully backed right now.

"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."