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SEC Fines Tether’s Former Auditor $1.5M for ‘Improper Professional Conduct’

The regulator said New York-based accounting firm Friedman LLP, Tether’s auditor in 2017, failed to perform audits appropriately.

2 min read
The U.S. Securities and Exchange Commission. Image: Shutterstock.

The U.S. Securities and Exchange Commission has fined Tether’s former auditing firm, Friedman LLP, to the tune of $1.5 million, according to an order issued Friday. 

The regulator found the accounting firm engaged in several instances of “improper professional conduct” in its audits of two companies from 2017 to 2020. 

According to the SEC, Friedman LLP “failed to design and perform” appropriate audit procedures in its work with grocery chain iFresh, and also “did not exercise professional skepticism and due professional care” in its handling of another unnamed company’s audit.

While the order doesn’t mention Tether outright, the stablecoin issuer retained Friedman LLP as auditor from May 2017 to January 2018 before ending the relationship.

The SEC’s order said Friedman LLP, which did not admit or deny the SEC’s findings, had agreed to settle the charges and will pay approximately $1.5 million in fines, as well as implement training for staff.

Tether’s dollar backing

Tether’s financial activities have been under probe for some time, driven in part by the company’s insistence that the composition of its reserves is commercially sensitive in such a competitive market. The broader crypto industry has faced renewed scrutiny from regulators 

Last week, a U.S. judge ordered Tether to produce documents showing the dollar backing of its stablecoin, the latest development in a lawsuit launched by crypto traders last year claiming the stablecoin issuer tried to prop up the price of Bitcoin with unbacked tokens.

A further investigation by the Commodity Futures Trading Commission found that Tether only held enough dollar reserves for a quarter of the time between 2016 and 2018.

Tether and Friedman LLP have not responded to requests for comment at the time of publishing.

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