The U.S. Securities and Exchange Commission (SEC) said Friedman LLP, which previously provided Tether audit services, violated public company accounting oversight standards.
During the investigation, the SEC found that the audit firm Friedman committed “violations of federal securities laws” and “inappropriate professional behavior” in its activities, including in relation to the iFresh chain of Chinese grocery stores. The company was found to have provided incorrect information about the conduct of audits in accordance with the standards of the Public Company Accounting Oversight Board.
The supervisor detailed Friedman’s “sloppy” accounting practices from 2015 to 2020, including the auditor’s failure to “responsive to fraud risks” and “exercise due professional care and skepticism.” To settle the regulator’s claims, Friedman will pay more than $1.5 million and provide additional employee training.
Although the SEC does not directly mention Tether, Friedman provided services to the USDT stablecoin issuer from May 2017 to January 2018, before terminating the professional relationship due to insufficiently fast auditing. This may not be good for Tether, as the issue of USDT stablecoin reserves is one of the hot spots for the crypto industry.
Tether has previously taken steps to increase transparency by publishing regular attestations confirming reserves. However, the company continues to carefully conceal information about the actual composition of assets. Recently, a US court ordered Tether to provide data on US dollar reserves. Last year, the company paid $18.5 million to drop charges from the New York Attorney General’s Office (NYAG).