The American SEC continues its crackdown on cryptocurrencies and Tether USDT is paying the price. Former SEC official John Reed Stark is calling for the Hong Kong-based stablecoin to be banned, due to its unaudited reserves and operating in a regulatory vacuum. It also asks US financial regulators to emulate Ontario by banning Tether USDT.
Former SEC Official Calls for Tether USDT Ban in the USA
The American SEC seems to be determined to continue its crackdown on cryptocurrencies. This time, it is the famous Tether USDT, which finds itself in the limelight.
Former SEC head John Reed Stark is taking a direct swipe at the market’s largest Hong Kong-based stablecoin and calling on US financial regulators to ban USDT outright.
On May 9, Stark exposed several issues related to Tether in a long post on Twitter to explain his point of view. Based on his experience and studies of markets and financial statements, he believes that Tether could be the next to go. Stark’s goal in exposing these issues is to make people aware of the risks facing the stablecoin issuing company and get them to take the situation seriously.
Indeed, according to him, USDT operates in a regulatory vacuum in the United States, with no clear legal framework to guide its operations. Additionally, Tether’s financial reserves have never been audited, raising doubts about their reliability.
“Tether’s core business, the essence of everything Tether does, is tied exclusively to Tether’s financial reserves. Yet these reservations remain unaudited, unconfirmed and therefore doubtful. “, he added.
Doubts Linger Over USDT Attestation
In its latest report for the first quarter of 2023 published Yesterday, Tether reported a net profit of $1.48 billion, along with a record $2.44 billion in excess reserves, surpassing the figures for the last quarter of 2022.
Despite these impressive numbers, criticisms of Tether continue to surface. In particular, Stark questioned Tether’s attestation. The latter stressing that this is not enough to replace a full audit. According to him, audits are designed to examine potential riskswhile attestations only verify whether the data presented is accurate at a specific time.
” Under any circumstances, an attestation is not the same as an audit – and that kind of “unverified snapshot” would never pass some sort of regulatory muster.”
Although Tether USDT remains the largest stablecoin by capitalization, with a market value of $82.53 billion, Stark’s criticisms are not to be taken lightly. Indeed, he urges US regulators to take a cue from Ontario, Canada, which has already banned cryptocurrency exchanges from offering Tether USD.
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