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Tether, the issuer of the {Tether} (USDT) stablecoin, has recently come under scrutiny from both a consumer protection group and a ratings agency. According to S&P Global, Tether received a stability rating of 4 out of 5, with 5 being the lowest, reflecting concerns about its stability.
On September 12, Consumers' Research, a consumer protection organization, released a report criticizing Tether for its lack of transparency regarding the reserves backing its USDT stablecoin. The group highlighted that Tether has not provided a comprehensive audit of its dollar reserves from a reputable accounting firm, despite repeated promises to do so. The report draws parallels between Tether’s situation and the lack of transparency that led to the collapse of FTX and Alameda Research.
The consumer watchdog’s criticism was further emphasized through an open letter sent to state governors across the United States, radio advertisements, and a dedicated website detailing their concerns. The group accused Tether of engaging in business practices that facilitate illicit activities and failing to prevent the misuse of USDT to evade international sanctions.
In response to these concerns, Tether has taken steps to address transparency issues. In January, Howard Lutnick, CEO of Cantor Fitzgerald, which manages Tether’s U.S. securities portfolio, affirmed that Tether has the reserves it claims to hold. Additionally, in July, Tether hired Philip Gradwell, former chief economist at Chainalysis, to produce reports on USDT usage. These reports aim to provide greater transparency to regulators and investors.
Further addressing concerns about illicit use, Tether CEO Paolo Ardoino announced in August that the company has assisted over 145 law enforcement agencies in recovering $108.8 million in USDT related to illegal activities since 2014. Moreover, in September, Tether partnered with Tron to establish the "T3 Financial Crime Unit," which will focus on identifying and freezing illicit USDT transactions on the Tron network, the primary blockchain for USDT trading.
