Consumer watchdog raises concerns over Tether's reserve transparency

Consumers' Research, a consumer protection group, has issued a report warning about stablecoin issuer Tether (CRYPTO:USDT), citing a lack of transparency regarding its US dollar reserves that back the USDT stablecoin.

The report, released on September 12, highlights concerns that Tether has yet to provide a full audit of its dollar reserves by a reputable accounting firm, despite numerous promises to do so.

The report compares Tether’s situation to the lack of transparency that led to the collapse of FTX (CRYPTO:FTT) and Alameda Research.

The consumer group emphasised the potential risks to investors and the broader financial system if Tether's reserves are not properly verified.

An open letter was also sent to every state governor in the United States, drawing attention to these concerns.

Additionally, the group launched radio advertisements and a dedicated website to further elaborate on the issues surrounding Tether's reserve transparency.

They accused Tether of "doing business with bad actors" and facilitating illicit entities using USDT to bypass international sanctions.

On the other side, Tether and its partners have attempted to reassure the public about the stability of its reserves.

In January, Howard Lutnick, CEO of Cantor Fitzgerald, which manages Tether's US securities portfolio, stated, "From what we’ve seen, and we did a lot of work, they have the money they say they have.”

To improve transparency, Tether hired former Chainalysis chief economist Philip Gradwell in July to provide detailed USDT usage reports, which will be accessible to US regulators and investors.

Furthermore, in August, Tether CEO Paolo Ardoino revealed that the company had aided over 145 law enforcement agencies in recovering $108.8 million in USDT tied to illicit activities since 2014.

More recently, Tether partnered with Tron to establish the "T3 Financial Crime Unit" to identify and freeze illicit USDT transactions on the Tron network.