Why I Still Don't Trust Tether

Submitted by QTR's Fringe Finance

For years, one of the biggest controversies surrounding stablecoin Tether was remarkably simple: was every USDT really backed dollar-for-dollar by actual U.S. dollars as the company claimed?

In fact, it is something I’ve been skeptical of over the years. If you ask me, the red flags have been numerous and it’s not just “FUD” that critics just invented out of thin air to piss in the crypto punch bowl.

According to the U.S. Commodity Futures Trading Commission, Tether represented from its 2014 launch that its token was 100% backed by corresponding fiat assets. The CFTC later found that, from at least June 2016 to February 2019, Tether made misleading representations that it maintained sufficient U.S. dollar reserves to back every USDT in circulation with corresponding fiat currency held in its bank accounts.

According to the regulator, Tether held sufficient fiat currency in the relevant Tether bank accounts to fully back circulating USDT on only 27.6% of the days examined during a 26-month sample. The CFTC also found that Tether at times counted receivables and non-fiat assets among its reserves, including unsecured receivables during part of the relevant period. Tether agreed in 2021 to pay a $41 million civil monetary penalty, without admitting or denying the CFTC's findings.

The New York Attorney General reached a separate $18.5 million settlement with Tether, Bitfinex and related entities that same year. According to the Attorney General’s investigation, Tether had at points represented that each token was backed one-for-one by U.S. dollars even though that was not always the case, while funds also moved between Tether and the closely related Bitfinex exchange amid an approximately $850 million shortfall involving a third-party payment processor.

The controversy subsequently shifted from whether there was literally one dollar in a bank for every USDT to the composition and liquidity of Tether’s broader reserves.

Tether later disclosed large holdings of commercial paper, prompting questions about the identity and location of the issuers, including speculation about exposure to Chinese companies. Tether denied holding commercial paper issued by troubled Chinese property developer Evergrande and, in July 2022, said its portfolio held no Chinese commercial paper.

Documents released in 2023 led Tether to acknowledge that it had historically held Chinese commercial paper, predominantly from the country's banking sector; Tether maintained that it had never held Evergrande paper and said it suffered no losses on those investments. By October 2022, Tether said it had eliminated roughly $30 billion of commercial-paper exposure altogether, replacing it with U.S. Treasury bills.

To me, this appears simply to be getting caught in two lies meaningful misstatements to the public: the first that every USDT was backed dollar for dollar, and the second about the composition of the company’s reserves. Fool me once, shame on you…

For years after those controversies, Tether still did not publish a full financial audit. Instead, it released periodic attestations from accounting firms, which verified management’s reserve figures at particular reporting dates but were narrower in scope than a full financial-statement audit. Critics repeatedly highlighted that distinction, while Tether itself said for years that it was working toward a full audit. As recently as March 2025, CEO Paolo Ardoino described obtaining one as Tether’s “top priority.”

That backdrop is why the bombastic announcement of a much awaited “audit” of Tether out yesterday is significant. Outlets claimed the company had finally “silenced critics”. Ardonio spent the day taunting critics (here, here) on Twitter (as if the above two…misstatements of truth…didn’t give people reason enough to be skeptical).

And then there’s the audit. According to Tether, KPMG U.S. completed a full independent audit of the financial statements of Tether International, S.A. de C.V. for the year ended December 31, 2025 and issued an unqualified opinion. KPMG separately confirmed to Bloomberg that it issued an unqualified opinion on Tether International’s financial statements under AICPA standards. The undeniable positive: this goes materially beyond the periodic reserve attestations Tether had relied upon for years. That is meaningful progress.

But readers should pay close attention to what exactly has been announced...(READ THIS FULL ARTICLE HERE).