Paolo Ardoino clashes with hedge funder over shady Tether disclosure

Tether CTO Paolo Ardoino says existing regulations mean the company does not need to release full disclosure of its assets and claims it has no need to silence its critics.

In a heated Twitter Spaces chat with former billion-dollar hedge fund manager and Peter Lynch assistant George Noble, Ardoino was interrogated about Tether’s refusal to disclose a schedule of investments.

During the 10-minute conversation, Noble asked Ardoino why he seemed disinterested in silencing the critics by releasing a full disclosure of Tether’s assets, stressing that routine disclosures are standard in every other industry.

The tone of the exchange escalated quickly into a confrontation. Noble struggled to stay civil as he pressed Ardoino on why Tether has never released an audit nor provided the names of Tether’s assets.

“It is an established fact, if you look at court documents, that Tether has lied in the past… The easiest way to get the critics to go away is to do what any company in any other industry would do ⏤ and that’s a full and complete disclosure,” said Noble.

“We are working on providing more disclosures,” Ardoino claimed. “There are no regulations yet on stablecoins. … Everybody needs to be held to the same standards.”

Ardoino called Noble out for losing his cool near the start of the exchange. He also asked why Tether needs to silence its critics at all. He claimed that customers were perfectly happy to use Tether.

Read more: Tether Papers: This is exactly who acquired 70% of all USDT ever issued

In a tweet thread, Noble compared Tether’s growth to the run-up in Enron before its 2001 collapse. Like Tether, Noble compared, Enron’s senior staff consistently refused to respond to requests from the public for balance sheets or cash flow statements.

Tether’s Paolo Ardoino sticks to the script

Tether claimed that it has easily handled the withdrawal of 10% of its reserves in the past few weeks. Over $10 billion in Tether redemptions occurred this month. Others called the unprecedented redemptions a bank run.

Tether releases periodic “snapshots” of its assets that it calls “Tether Assurance Consolidated Reserves Reports.” These moment-in-time attestations are not a full audit.

Traditional money market funds file complete financial disclosures accompanied by their Committee on Uniform Securities Identification Procedures (CUSIP) numbers. The American Bankers’ Association and Standard and Poor’s Global Market Intelligence, for example, issue CUSIP numbers through CUSIP Global Services. CUSIP numbers provide precise information on the issuer and type of each financial instrument.

Tether has previously issued attestations of the assets that it held. One attestation by Friedman LLP found that Tether had $382,064,782 in a bank account on September 15, 2017.

Read more: FAQ: Inside the Tether Papers investigation

However, Noble accused Tether of moving money into an account before getting that attestation and moving it back out after the attestation. The New York Attorney General’s investigation into Tether and Bitfinex confirmed that, indeed, Bitfinex had transferred $382 million to the bank account just hours prior to Friedman LLP’s attestation.

Tether has repeatedly promised to conduct an audit, but has repeatedly failed to produce one. Friedman LLP would have done a full audit of Tether’s finances in 2018. However, the two companies abruptly parted ways when Tether proved unwilling to disclose all the details about its finances.

Tether and Bitfinex previously lied about matters like their close relationship. Bitfinex’s Phil Potter later admitted that Bitfinex actually owns a stake in Tether. Although common knowledge today, Tether closely guarded this secret for years. Bitfinex’s transfer of money to Tether’s bank account before Friedman LLP’s attestation demonstrated a willingness of both companies to cover for each other.

There are other curious aspects of Tether’s history. For example, Tether claimed that it never meant for its original whitepaper to describe its operations. It was also caught lying while claiming that it would not issue Tethers for a loan secured by digital assets.

Paolo continued to insist that Tether did not need to disclose its complete finances because regulations did not require it to disclose more than its current attestations. He also claimed that Tether did not need to silence critics. Their conversation is recorded and is accessible for replay.

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