FIRST ON FOX: Consumers' Research group is sounding an alarm to the public about the cryptocurrency "stablecoin" known as Tether, calling it an unregulated currency threat that undermines U.S. financial controls.
"Tether has been promising that it would conduct a full audit for years but has still failed to do so," Executive Director Will Hild told Fox News Digital in a statement.
"Until a credible third-party auditor can verify their claim of 1:1 U.S. dollar backing and that they have sufficient financial controls in place, consumers should be cautious about investing their money with them," Hild said.
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"Consumers should be wary of trusting actors like Tether who have a history of false claims and a deliberate lack of transparency," Hild said.
Hild will also send a letter and a consumer warning to every governor across the country "warning them about the dangers of Tether and asking them to take steps to protect their constituents from financial harm" on Friday, FOX Business has learned.
The research group is also sending off a digital radio ad blitz, sounding the alarm about the purported risks of Tether, as well as website TetherWarning.com
The letter comes as the Wall Street Journal reported this week that Tether – creator of the USDT stablecoin – facilitates a parallel economy that operates beyond the oversight of U.S. law enforcement. According to the article, "A giant unregulated currency is undermining America’s fight against arms dealers, sanctions busters and scammers. Almost as much money flowed through its network last year as through Visa cards. And it has recently minted more profit than BlackRock, with a tiny fraction of the workforce."
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As of May 1, 2024, Tether has reported holding $6.3 billion in excess reserves, despite never having undergone an audit according to international accounting standards. The company also disclosed a profit of $4.52 billion for the first quarter of 2024.
In 2021, Tether and crypto exchange Bitfinex found itself in hot water after they were ordered to pay $42.5 million to settle civil charges from the U.S. Commodity Futures Trading Commission (CFTC) over allegedly making misleading statements and making illegal transactions.
Firms doing business as Tether agreed to pay $41 million to resolve CFTC charges they made misleading claims about Tether's cryptocurrency stablecoin, the CFTC said at the time. According to the regulator, at various times from June 2016 to late February 2019, Tether made misleading or untrue statements about whether it held sufficient U.S. dollar reserves to fully back up its U.S. dollar tether token.
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As such, the research group's letter also suggests implementing some regulatory frameworks to safeguard consumers from fraud while encouraging the integration of cryptocurrency into the financial system.
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This week, Tether joined other cryptocurrencies, Tron and TRM Labs, to combat crypto crime and formed what is now known as the T3 Financial Crime Unit, Forbes reported.
FOX Business reached out to Tether but did not hear back by press deadline.
Reuters contributed to this report.
