The US SEC (Securities and Exchange Commission) has fined the former auditor of Tether, the popular stablecoin issuer, a sum of $1 million. Friedman LLP is a New-York based accounting firm that provided services to Tether in 2017. The agency has accused the firm of “serious violations” of federal securities laws and “improper professional conduct.”
According to reports, the SEC filed and settled the charges last week against the accounting firm. As per the SEC’s investigation, the accounting firm lied about its audits being in accordance with the Public Company Accounting Oversight Board. In particular, the SEC found that the firm lied about its audits regarding iFresh, a Chinese grocery chain, and another unnamed company.
Among other things, the SEC’s order highlights Friedman LLP’s failure to “respond to fraud risks” and “exercise due professional care and professional skepticism.”
However, the SEC’s order makes no mention of Tether, although the stablecoin issuer employed the services of the accounting firm between May 2017 to January 2018. Tether spoke to CoinDesk and said that the firm was fired for not providing an audit in time.
Friedman LLP has committed to training its staff in appropriate auditing procedures as part of its settlement agreement with the SEC. The company will also pay $564,138 in disgorgement and prejudgment interest in addition to a $1 million civil penalty.
Tether in a tight spot?
The news regarding Friedman LLP comes hot on the heels of the stablecoin issuer being ordered to prove its USDT backing. Tether has often faced flack for not producing complete audits of its reserves. The firm promised a complete audit to its investors in 2017. However, 5-years in, the company is still to live up to its word.
Nonetheless, Tether has agreed to produce all necessary documents to prove that it indeed does have the necessary backing. According to Tether, the documents will resolve all doubts regarding its USDT holdings and reserves.
Moreover, the firm recently hired BDO Italia for its quarterly attestations.
