John Reed Stark, former head of the SEC’s Office of Internet Enforcement, has urged American financial regulators to ban cryptocurrency companies from offering the stablecoin Tether USDT, referring to the cryptocurrency giant as a “mammoth house of cards.”
He previously detailed different issues plaguing Tether in a lengthy tweet on May 9 to hammer home his argument before recently responding to Tether’s CTO Paolo Ardoino’s response, which includes a link to Tether’s most recent Assurance Report.
The CTO of Tether responded to my previous tweet about Tether with a link to Tether's most recent Attestation Report. https://t.co/cqRoJSaChR
Here is my response:
Thanks for responding Mr. Ardoino and for taking the time to address my concerns, albeit with a link to a report,… pic.twitter.com/89IgmfaUk6
— John Reed Stark (@JohnReedStark) May 10, 2023
He thanked Paolo for, at least, taking the time to respond to his concerns with a link to Tether’s latest Q1 2023 Assurance Report that shows that the firm’s reserve surplus is at an all-time high of $2.44 billion, up $1.48 billion in net profit.
The former SEC official believes Tether needs a formal audit
John Reed Stark continues to question the long-term viability of Tether, even though the company’s most recent attestation report might have addressed some of these concerns. He claims that the stablecoin issuer might be the next domino to fall based on his experience and his years-long study of markets and financial accounts.
Stark disagreed with Tether’s attestation, claiming it could not take the place of an audit. He contends that attestations just look at whether the information being supplied is accurate at the time of the examination, whereas audits are intended to look for potential dangers.
He said,
“In my opinion, an Attestation Report or Assurance Report, whatever the nomenclature, is not the same as a traditional financial audit.”
Furthermore, he asserts that he remains baffled as to how an $80 billion financial organization like Tether can operate with confidence without a formal audit that is released along with certified financial statements, as every U.S. public company, bank, and brokerage does.
Stark further questioned why Tether’s Chief Technology Officer, Paolo Ardonio, was always talking about the company’s financial situation and not its Chief Financial Officer.
Stark’s latest attack on the crypto industry
The latest strike against Tether is not the first time the self-described “financial expert” has launched attacks against cryptocurrency companies. He has been known to make controversial statements about the industry, and his opinions are often met with disagreement by the crypto community, which views him as a detractor, although other commenters view him as a constructive critic.
As reported by Wealth Growth Insights, Stark recently warned that the future of the Binance crypto exchange might be in jeopardy. He listed a number of concerns regarding Binance, such as a lack of verifiable and reliable information, a CFTC case alleging regulatory violations, a lack of verification of reserves, and an absence of audited financials, among others.
Despite these problems, Binance continues to be the most prominent cryptocurrency exchange by trading volume, while Tether’s USDT token continues to be the largest stablecoin. USDT is the 3rd largest coin with a current market cap of $82.53 billion and a 24-hour volume of $31,845,604,899.
