Tether: $31 Million Hack and Split With Auditors

Tether, the creator of the cryptocurrency pegged to the US dollar, suffered losses of $31 million following a hack which took place in November.

The company has separated from its auditor, which was in the process of reviewing its assets, claiming that the auditor applied ”excruciatingly detailed procedures”.

According to Coindesk, the scrutinized cryptocurrency company, has renounced the audit services of Friedman LLP. Tether made the statement on Saturday night that their business relationship ”is dissolved”.

“Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame,” contained the statement.

This split will most likely increase the criticism that the cryptocurrency is facing, many being already suspicious of its banking.

Tether created a cryptocurrency called USDT which was pegged and supposedly backed up by the dollar. It was designed to function as a stable coin, allowing traders to avoid the negative effects of the market’s volatility.

The cryptocurrency was hacked in November, resulting in a loss of $31 million. This attack has generated online rumours that Tether is facing more serious problems around its solvency.

Tether has also created a lot of speculation regarding its close relationship with Bitfinex, who was accused of creating Tether coins and pushing their price up by using them to purchase Bitcoins.

“One persistent online critic, going by the screen name Bitfinex’ed, has written several very detailed essays on Medium arguing that Bitfinex appears to be creating Tether coins out of thin air and then using them to buy Bitcoin and push the price up,” wrote The New York Times.

An article written by Bloomberg questions if the coin is actually backed up by the dollar. “Among the many mysteries at the heart of the cryptocurrency market are these: Does $814 million of a digital token known as tether really exist?”

Tether responded to this wave of criticism calling it ”uninformed and baseless” and promised in a statement in December that the audit made by Friedman will vindicate the company.

“We understand that the public is anxiously awaiting the completion of this process, but it cannot be rushed and we are not Friedman’s only customer,” said the company. “Moreover, the amount of due diligence that is being performed by Friedman is substantial.”

In a statement made this Saturday to Coindesk the company said: “As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.”

Tether has caused a lot of criticism over how it handled the hack, if it is really backed up by the US dollar and its questionable relationship with Bitfinex. It remains to be seen if its image will improve or if they will solve their issues, but at the moment their situation doesn’t look too great.