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Comment by ceejayoz | Hacker News Reader

There's exceedingly strong evidence Tethers are not backed by USD - the Tether website claims "frequent professional audits", but they never completed their first one, were fired by their auditor, and cited a document explicitly stating it was "not intended to be, and should not be, used or relied upon" as proof of their reserves.

It's a demonstrably fraudulent claim right there on their home page.

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That is not strong evidence that they are not backed by USD. That is strong suspicion.

> Lack of transparency does not necessarily indicate fraud

https://blog.bitmex.com/tether/

Putting it another way, there is no evidence that Tethers are backed by dollars.

> Lack of transparency does not necessarily indicate fraud

Fraudulently claiming "frequent professional audits" that don't exist is good evidence of fraud.

So is having a big link "proof of funds" on the home page that links to https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co... which says "not intended to be, and should not be, used or relied upon by [non-Tether parties]".

Clearly we do not agree so it is not worth continuing to argue. Honestly, I just want this whole thing resolved one way or the other. I have no personal ties to Tether, and do not care if they are backed 1:1 with USD.

I agree with you they should have an audit done to prove definitively one way or the other that they are backed by USD to put this entire thing to rest.

As it is now, it keeps coming back up every few months in the media, and the narrative is getting old.

Do you not think that perhaps the media should keep coming back to the possibility of multi-billion dollar fraud like this?

Valid point, but there are also billions of dollars created out of thin air by the Federal Reserve to pump up the stock market, and perhaps that deserves some media attention as well.

https://suremoneyinvestor.com/2017/08/how-the-feds-money-pri...

Those actions did garner media attention. Massive amounts of it.

Do you feel that the narrative about Theranos was getting old, too? Continued questions about fraud and deception?

Shouldn't it be incumbent on them to prove that they are backed by USD and not on me to disprove it? They are the ones making the extraordinary claim here.

Given the little we do know about the company the most reasonable assumption is that it is a slightly reworked Ponzi scheme.

What makes the claim extraordinary? If I wanted to make an easily tradable form of USD on the blockchain, I would take a similar approach. Take deposits in US Dollars and issue an equal number of “dollar backed coins” on the blockchain that can then be sent around from exchange to exchange. Nothing about that seems extraordinary to me.

It is very likely the federal reserve is going to do something very similar in the coming years. They will also print more of their coin at will, but no one is going to make a stink about that cause they have already been doing it for a hundred years.

The extraordinary claim that people pumped billions of real US dollars into an upstart exchange with no proper accounting.

Ahhhh. Okay that makes more sense. Although at the time they did have accounting and audits. The last audit was September 2017, I believe.

No, Tether never completed an audit. Their auditor fired them. Their claimed "frequent professional audits" on the home page encompasses precisely zero completed audits.

https://www.coindesk.com/tether-confirms-relationship-audito...

> 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. 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.

Wrong. They were fired after their audit in September 2017 which is available here:

https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...

That's not an audit. It's a memo.

It explicitly states on the first page that it cannot be relied upon.

When Tether posted it (https://tether.to/announcement-transparency-update/) they stated " These consulting services do not constitute an audit or attestation engagement, which would include a significantly expanded scope of procedures and take substantially more time to complete."

And into a bank that has no US dealings or holdings, because Wells Fargo dropped them, and there are challenges with them using a US banks.

A bank that, through 2017, raised no questions when they were supposedly depositing multiple hundred million dollars, _multiple_ times a week.

I agree that there are dubious actions surrounding Tether, but I still want to see proof.

I think the bank argument is a little weak since banks are the exact group that crypto currencies are disrupting and stand to lose the most if crypto currencies succeed. If I were a bank I wouldn’t want to be involved with any company that makes it easier for people to trade US dollars for crypto currencies either.

Then they are doing a REALLY bad job at managing their presence, because "Transparency" is one of their hallmarks:

https://wallet.tether.to/transparency

... supposedly.

Those are very specific numbers to be touting without anything supporting them.

People will simply look the other way on this as long as it benefits their worldview. Once things go south the cries will be "Tether lied to us, how could we have known?"

I don't know. There's a certain level of cognitive dissonance required. They will say...

Tether was FORCED to print, even if they didn't have the USD. The amount of FUD, and active attacks from the traditional banking system suppressed the price of bitcoin. Tether were trying to SAVE us... and so it goes.

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