The so-called “Tether Audit” that isn’t an audit at all

4 min readSep 30, 2017

Some people were quick to jump onto me about this new ‘Tether Audit’ (Available here), showing that everything I was saying was just FUD.

Unfortunately, none of them actually read the report.

Let’s start right from the beginning.

Even Friedman LLP Says “Do not rely on this report”.

Nowhere does it say audit. It’s a “Internal Memo”.

This information isn’t to be relied upon by third parties (that means all of us), it’s just to help Tether’s own management.

Even Tether doesn’t portray it as an “audit”

And it gets worse…

Friedman LLP doesn’t claim that Tether isn’t violating the law.

Friedman did not evaluate if what Tether is doing is even legal. They’re just checking to see if there is money in an account.

Tether is still mum about where they are banking

Unlike their previous release, they decided to redact the name of the bank. You’re not even allowed to know what bank your money is in (which in theory it’s your money if you hold a Tether).

Here’s their previous release:

Bank names and account numbers. No big super secret information.

In my opinion, this is unacceptable. Hiding where they are banking is not transparency, remember, this is supposed to be your money.

In the case anything goes wrong, you don’t know what bank or jurisdiction to file a lawsuit against them in. This is one reason why they are hiding. They are also probably trying to avoid being sued and likely trying to avoid regulators as well.

If everything they’re doing is legal and on the up and up… then why are they hiding? What do they have to hide?

Notice where it says “For the benefit of”, the account is in reality under another name, like a Trust, as Tether itself can’t get banking.

But this report keeps getting better and better.

Take a good look at the last two notes.

Note 1. “FLLP makes no representations about sufficiency or enforceability of any trust agreement between the trustee and the Client”

So, the trust agreement may not be worth the paper it’s printed on.

And more importantly… Note 2.

“FLLP did not evaluate the terms of the above bank accounts and makes no representations about the clients ability to access funds from the accounts or whether the funds are committed for purposes other than Tether token redemptions


  1. Friedman doesn’t know if Tether can even access the funds.
  2. Friedman doesn’t know if the funds are in fact for tether Token redemptions or committed to something else (like margin debt on Bitfinex)

So what does this mean?

This means that somebody has money, but they still never have to give it to you, and that money could be committed to other things or simply said there’s more than one claim against each dollar (i.e., they hold the money in their bank that matches the Tether circulation, but they also have those dollars in margin lending on Bitfinex generating interest)

For those not paying attention, these are the legal Terms Of Service behind Tether.

No legal claim against them to redeem Tethers

They of course claim that this clause is for ‘compliance’ with AML/KYC laws, but this claim is ridiculous, as they already have those clauses. So once again, they’re simply lying about the reason for this non-redeemability clause.


Central to my claim is the fact that tethers are completely non-redeemable. I have repeatedly said, even if they have the money, it doesn’t matter. They never have to pay you.

Not to mention, that money could have multiple liabilities against it.

Bitfinex can have ‘full reserves’ of Tether, while loaning them all out on Bitfinex, because the money is in the same accounts, but in reality, you have Tether holders and that money being used for lending at the same time.

So, despite the fact that “they have all of the money”, there would be more than one claim against it, a Tether claim, and a margin debt on Bitfinex.

Finally, this report is an internal report, and worthless to us. They should have just waited for the actual audit, if it’s ever coming.

One thing we still don’t know, if Tethers were issued BEFORE deposits. Why is that important?

Issue Tethers, pump up crypto prices, sell cryptos, deposit profits to Tether, boom, full reserves. Nobody is the wiser.

Trade carefully.





Blog for @Bitfinexed on Twitter. Exposing possible fraud by largest Bitcoin exchange, Bitfinex/Tether