[devilmoon]

eeeeeh I dunno

1) FSS is not an accounting firm and did not perform the above review and confirmations using Generally Accepted Accounting Principles.

2) The above confirmation of bank and tether balances should not be construed as the results of an audit and were not conducted in accordance with Generally Accepted Auditing Standards.

3) FSS makes no representation regarding the sufficiency of the information provided to FSS and all inquiries made by FSS have been directed to the Client and/or third party personnel responsible for maintaining such information, and the data has been obtained from the Client and/or third party personnel responsible for maintaining such information.

4) FSS procedures performed are not for the purpose of providing assurance and are limited to the findings listed above as of June 1st, 2018, Close of Business. FSS has not performed any procedures or made any conclusions for activity prior to or subsequent to June 1st, 2018, Close of Business.

5) FSS did not, as part of the Engagement, arrive at any conclusions as to Tether’s compliance with applicable laws and regulations in any jurisdiction.

6) FSS has assumed, without further inquiry, that the bank personnel providing the confirmations were duly authorized to provide such confirmations, and that the confirmations were correct.

[TAForObvReasons]

7) FSS did not actually verify the liabilities:

> In conjunction with receiving the above balance information, FSS requested the Chief Financial Officer and the General Counsel of Tether to certify, by sworn statement, the amount of fully-backed USD Tethers that were in circulation as of the close of business on June 1st, 2018.

Based on the numerous downvotes, it seems many people didn't actually read the PDF in question. The quote is directly from the report and at no point does FSS claim they verified the USDT half of the claims, only that bank accounts on a particular day held a specified dollar amount.

[vorpalhex]

You didn't counter the point. An Audit isn't some pinky swear. It requires an external accountant to review not only the account balance but how it got there.

[ac29]

"The above confirmation of bank and tether balances should not be construed as the results of an audit and were not conducted in accordance with Generally Accepted Auditing Standards."

There was no audit.

[TAForObvReasons]

... that was a quote directly from the PDF. All FSS actually reviewed was the bank balances. The USDT side was based on a sworn statement from Tether, which calls the whole analysis into question.

[ceejayoz]

Plus "who else might have claims on this".

[ttul]

And... where did it come from...

[ttul]

7) Who’s to say that the folks at Tether haven’t pledged all that cash as collateral against enormous loans?

[ceejayoz]

Or borrowed it from Bitfinex's customers' holdings before engaging a consulting firm to check their balances.

[andrewla]

"Borrowed" might be strong.

We don't know how strong the relationship between these companies is. One possibility is that Bitfinex wants to allow customers to immediately withdraw any USD deposits to other exchanges that accept Tether-USD. If that is the case, then effectively all deposits into Bitfinex are immediately "sold" to Tether in exchange for Tether-USD. That would mean that Bitfinex does not have any USD at all. Therefore the balance of USD in Tether's bank accounts would include all Bitfinex deposits.

Except for the opacity involved, nothing here would actually be misleading or obviously unethical; whether it is illegal is another question.

[gvhst]

While I am not ruling out any shenanigans (and would only really trust an audit from a big 4 firm, if that), the report says that their cash is unencumbered. From investopedia [1], "Creditors do not have any claims to assets that are unencumbered, as there are no associated debts relating specifically to the assets."

[1]: https://www.investopedia.com/terms/u/unencumbered.asp

[ceejayoz]

From the memo:

> FSS makes no representation regarding the sufficiency of the information provided to FSS and all inquiries made by FSS have been directed to the Client and/or third party personnel responsible for maintaining such information, and the data has been obtained from the Client and/or third party personnel responsible for maintaining such information.

In other words, "unencumbered" here means "Tether told us they're unencumbered".

[devilmoon]

I work for a big 4 although not as an auditor. Do not trust audits by big 4 firms.

[ttul]

Oooh even better