Cryptocurrency

Former SEC official calls for US ban on Tether, calls it a ‘mammoth house of cards’

Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark called the company a “giant house of cards” and called on U.S. financial regulators to ban cryptocurrency companies from offering Tethered USDT. requested.

In a lengthy Twitter post on May 9, Stark made his case by addressing the various issues plaguing Tether. He said that his experience and research into markets and financial statements over the past few years has convinced him that stablecoin issuers could be the next domino to fall.

Tether operates in a regulatory vacuum

Noting that Tether does not have a legal framework to guide its operations in the United States, it operates without regulatory constraints, Stark said, noting that “there are also US requirements on how the reserves are invested.” , there are no auditing or reporting requirements,” he added.

“Tether’s basic business – the very essence of everything Tether does – is tied solely to Tether’s financial strength.

This is a red flag, he said, because Tether users have to deal with its “disparaging and ineffective hype, hype and hype.”

Questions about tether authentication

Stark criticized Tether’s certification, saying it cannot replace audits. Audits are designed to look for potential risks, he said, while certifications only check whether the data presented is accurate at the time.

Stark said:

“Under no circumstances is a certification the same as an audit, and this type of ‘unverified snapshot’ will not pass any regulatory review.”

Additionally, stablecoin issuers are no longer legally required to provide reserve certificates. This means the company may not provide further certification, leaving further questions about its reserves.

Meanwhile, Tether released its latest certification report earlier today, showing net profit of $1.5 billion for the first quarter of this year.

“Tether’s internal controls are sorely lacking that it speaks volumes to Tether’s credibility and credibility if it cannot instantly account for financial reserves with the click of a mouse.”

Stark also wondered why Tether’s chief technology officer, Paolo Aldonio, is constantly arguing about the company’s finances instead of being its chief financial officer.

call for ban

Stark I got it The Canadian province of Ontario has banned cryptocurrency platforms from offering Tether USDT and called on the United States to do the same.

Earlier this year, Crypto.com delisted USDT for Canadians, citing compliance with regulatory requirements.

This isn’t the first time Tether has faced questions about its reserves and operations. Stablecoin issuers have consistently insisted that their businesses are well-managed and that they have no impact on distressed cryptocurrency companies.

Despite these issues, Tether’s USDT token remains the largest stablecoin. It has a market capitalization of $82.53 billion and a 24-hour trading volume of $24.18 billion.

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