Tether Boasts Record Profits—But Reserve Claims Remain ‘Dubious’, Says Former SEC Attorney

A lively discussion between a former Securities and Exchange Commission enforcement attorney John Reed and Tether’s CTO, Paolo Ardoino, ensued after the attorney tweeted a fierce criticism of the company, beginning with: “IMHO, Tether is a Mammoth House of Cards.”

An attorney with nearly two decades at the SEC, Reed is adamant in his distrust of Tether, citing what he calls the company’s opaque financial statements and a lack of regulatory framework from the government.

Reed’s lengthy first tweet garnered the attention of Ardoino, who promptly responded with Tether’s latest Attestation Report.

Although attestation appears to be the market standard, due to cryptocurrencies’ (and especially stablecoin issuers) unregulated status, the former SEC attorney remained skeptical, replying with a series of criminal charges against the company, as well as saying there’s a need for proper auditing.

Tether did not immediately respond to a request for comment from Decrypt.

Ardoino was quick to tweet, an 18-bullet point defense that began with: “Tether is not a U.S. company and does not operate in the U.S., nor solicit U.S users. Our core markets are the unbanked people in emerging markets and developing countries, billions of people left out from the financial system just because they’re too poor to be of interest of the banking industry”, adding that the company works closely with authorities and blockchain tracking companies.

The former SEC attorney acknowledged several of Paolo’s points, although was hasty to counter that “perhaps crypto can help people in truly oppressed societies” but sees more costs than benefits in developed nations, ending on the note that the only beneficiaries for crypto are “grifters” and “criminals.”

Today marked the end of the discussion according to Reed with his fourth and final tweet on the matter, wishing that the CTO’s promises were true, but stating that “everyone using Tether is at risk.”

The discussion comes amid Tether’s latest assurance report that saw massive first quarter profits totalling $1.48 billion dollars. Tether isn’t the first of Reed’s targets. Last year he was critical of Binance’s Proof of Reserves audit, calling it a red flag.