The Block reported yesterday about Tether admitting to allegations that users made for several years now. The Block cites David Miller, the attorney for Bitfinex, from a transcript that the news outlet received. In it David Miller says:
“Prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.”
Revisiting Earlier Audits of Tether
This would explain why Friedman LLP, an accounting firm, that Tether employed in late 2017 to conduct an audit dissolved the relationship in January 2018. Friedman LLP did not give any statement as to why the partnership dissolved without an audit report. Later in 2018, Tether employed a second firm to conduct an audit. Freeh, Sporkin & Sullivan LLP (FSS) conducted the audit and could declare that Tether backs its cryptocurrency indeed 100% with cash.
Bitcoin Price Crash Imminent?
It is likely that further investigations will follow to revisit this audit. But the question remains whether or not Tether manipulated the market to pump or dump the Bitcoin price as many people allegated throughout the years. Miller stated that it was only “a small amount” that Tether invested. However, he did not give any definite numbers. But if the amount that Tether holds in Bitcoin is indeed negligible it is unlikely that a crash of the Bitcoin price is imminent. At least not directly.
Tether Could Start a Chain Reaction
Still, the future of Tether is not yet certain. It remains to be seen how the markets will react to a possible demise of Tether. The supreme court judge of New York remarked about the general state of the stablecoin that “Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent?” The judicial consequences for Tether could be severe. Possible that Tether will unleash its own storm soon in cryptocurrency trading.