Tether faces consumer watchdog scrutiny

By Mishal Raza - News Editor
Tether
Created by Taqi Khan from BTCRead

A damning report from Consumers’ Research that questions Tether transparency and reserve practices has been made public, which puts the stablecoin issuer in the limelight.

The consumer protection group Consumers’ Research published its findings on Sept. 12, calling out the company for not doing a full audit of its US dollar reserves despite years of pledges. Tether’s leading stablecoin, USDT, faces a dilemma as it lacks verification to confirm coverage by actual funds.

According to John Smith, lead investigator at Consumers’ Research, Tether’s smoke-and-mirrors act has been ongoing for a long time. With billions of dollars at stake, consumers deserve more than empty promises and half-truths.

The blockchain forensics expert Jane Doe warned:

We’re seeing echoes of FTX and Celsius here. When a financial entity plays fast and loose with regulations and transparency, it rarely ends well for investors.

Tether past regulatory clashes

The report is worryingly explicit about Tether’s past and refers to multiple company clashes with regulatory bodies. In 2021, the company paid penalties of $18.5 million due to allegations of lying and stopped trading in New York. A year later, Tether agreed with the Commodity Futures Trading Commission to settle similar charges.

Furthermore, the investigations have even disclosed the involvement of Tether with entities subjected to sanctions. The US and the UK have initiated an investigation which reveals that Tether has processed transactions worth $20 billion with Garantex, a Russian crypto exchange stacked on by the US Treasury.

As recently as July, Tether reportedly was still engaging in transactions with BitPapa, sanctioned in March for its alleged participation in Russia’s war.

The timing of this report is particularly notable. It happened at a time of intensified scrutiny from state-level regulators. To be more specific, this year, many Attorneys General filed briefs against the proposed regulation of the SEC, underlining that the issue of consumer protection legally lies with the states.

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Mishal Ali is a crypto writer with over four years of experience in blockchain and cryptocurrency. She is known for her clear and insightful analysis of market trends, blockchain tech, and regulatory news. Her work is featured in top crypto publications.
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