SEC fines former Tether auditor over accounting malpractice

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The U.S. Securities and Exchange Commission announced Monday it filed and settled a US$1 million fine against Friedman LLP, Tether’s former auditing firm, over “serious violations of the federal securities laws.”

See related article: What is the right approach to regulating stablecoins? 

Fast facts

  • The SEC reported finding several instances of “improper professional conduct,” including a failure to “respond to fraud risks” and “exercise due professional care and professional skepticism.”
  • In addition to the US$1 million civil penalty, Friedman LLP has agreed to pay US$564,138 in disgorgement and prejudgment interest and to train its employees in proper auditing procedures.
  • The SEC investigation made no mention of Tether, its relationship to the firm having been “dissolved” and its auditing halted in January 2018 due to slow progress, according to a representative of the stablecoin issuer.
  • This follows Tether’s numerous clashes with U.S. legal institutions, including its petitioning of the New York Supreme Court in August 2021 to prevent the state’s attorney general’s office from publishing documents outlining its reserves, further raising doubts about their ability to financially back up the stablecoin. 

See related article: Should Tether’s shrinking cash reserves be cause for investor worry? 

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