Photo credit: Tether
Tether seems to be in more hot water. 

The stablecoin issuer has once again come under fire after Consumers’ Research sent a letter to every state governor in the US warning against the company for failing to verify “their holdings and their financial controls through an audit by a credible third party.”

Despite promising to conduct a complete audit since 2017, The consumer watchdog claimed that there is still no audit from a reputed firm and Tether's avoidance raises “a distressing red flag” for the company and its USDT stablecoin.

Highlighting some of Tether’s previous suspicious activities, the consumer protection went on to explain Tether has “a history of false claims.” New York had found that the stablecoin moved hundreds of millions of dollars to cover up the loss of $850 million in client money.

This resulted in Tether ceasing trading activity in New York and paying around $18.5 million after being ordered by New York Attorney General Letitia James.

Although Tether released a report from a law firm claiming USDT was backed by US dollars, the Securities and Exchange Commission (SEC) fined the law firm for “improper accountancy purposes” in 2022.

Additionally, the consumer watchdog claimed that Tether conducted business with “bad actors.” 

Amid all the accusations and regulatory restrictions over the years, Consumers’ Research stated that Tether was still processing transactions from BitPapa in July 2024, a crypto exchange that was sanctioned by the US for its role in Russia’s war against Ukraine.

Explaining the importance of this case, Consumers’ Research’s Executive Director William Hild, said:

“Tether has many of the same issues that FTX and Celsius had before their collapse – potentially costing consumers billions of dollars using deceptive and misleading marketing tactics that are inconsistent with the truth. ”

Concluding his statements, Hild urged the governors to take appropriate steps to protect citizens from financial harm.