Tether (USDT) ‘Quietly’ Changes Details of its Token Backing; Faces New Criticism
Stablecoin Tether is again at the fore after changes in the details of how it supports supply tokens. Tether’s website was noted and shared by several online users on March 14. These changes appear to have altered the way the company provides security for the token it issues. The changes have been made. As reported by several online users on March 14, disconcerting changes were noticed and posted to the Tether website, which apparently altered the way the business ensures that it can use the tokens.
In the previous terms, the stablecoin had a USD 1:1 support. However, in the crypto community, these claims were never accepted. Tether has never published an audit report as evidence of support from an independent audit organization.
Tether has a document by Freeh, Sporkin & Sullivan LLP, an attorney firm, which appears to support Tether’s assertions that each USDT has 1 dollar support. The document, however, cannot be fully trusted because the law firm has added paragraphs which reflect that they are not an accounting firm and have not adhered to “usually accepted accounting standards.”
Although not known as to the exact date of the change, the website of Tether apparently has adjusted the details of how it ensures that tokens are circulating reserves, with the statement “100 percent supported” not saying any USDT is backed by fiat money.
Firstly, Freeh, Sporkin & Sullivan is not an accounting firm and has not done so by generally accepted principles of accounting. The document also indicates that the confirmation should not be interpreted as a consequence of an official audit.
The new definition of reserve states that USD Treasury bills and other money market instruments may include other assets other than fiat equivalents. The new definition, therefore, suggests that Tether can back its stablecoin, even loans to other corporations, with other assets on the balance sheet.
In cases where USDT losses fail or last if investors merely lose trust in USDT, they could lead to the losses on Bitcoin and the cryptocurrency markets more generally.
In the light of Tether’s change in reserve policy, the cryptocurrency community raised its alarm bells, and industry experts took on the situation.
In an email, Demeester said that Tether would invest some of its reserves and liquidity to meet the potential reimbursement of a large number of bills at any time.
The company continues to strive to improve the availability of Tether tokens for more players in the cryptocurrency space, despite the recent controversy surrounding Tether. In early March, Tether announced plans to partner with the Tron (TRX) blockchain protocol, which would see the issuance of USDT on the Tron blockchain later in the year.