A Washington-based law firm co-founded by former FBI director Louis J. Freeh has attested that as of June 1 cryptocurrency firm Tether had enough U.S. dollar reserves to back its virtual coins in circulation, according to a report released by Tether on Wednesday.
The report by Freeh, Sporkin & Sullivan LLP, comes a week after a University of Texas research paper alleged Tether’s token could have been used to manipulate bitcoin’s price last year during its meteoric rise.
Tether critics have raised concerns over the past year about whether it actually holds $1 dollar in reserve for every token called tether issued, as it claimed.
The FSS report is not a full audit of Tether, but states the law firm received sworn and notarized statements from Tether’s two banks which indicated the company had approximately $2.55 billion in its accounts on June 1.
“FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018,” the report said.
The day of the examination was selected by FSS, the law firm said in the report, adding that it conducted “comprehensive examinations and telephone interviews of key personnel at Tether and its banks.”
The report did not disclose the names of the banks and also stated “FSS did not, as part of the Engagement, arrive at any conclusions as to Tether’s compliance with applicable laws and regulations in any jurisdiction.”
Eugene Sullivan, a former federal judge and FSS cofounder, is an advisory board member of one of Tether’s banks, the report said.
FSS did not immediately respond to a request for comment.
Tether shares investors and management with Bitfinex, one of the world’s largest cryptocurrency exchanges.
“These allegations of manipulation are … just completely misplaced,” Stuart Hoegner, Bitfinex’s general counsel, said in an interview.
Tether hired FSS in March and is in discussions with auditors for a full audit, Hoegner said.
Global regulators have been scrutinizing cryptocurrency markets following a rally in prices last year. The U.S. Commodity Futures Trading Commission and the Department of Justice are reportedly investigating whether the price of bitcoin is being manipulated.
In December the CFTC sent a subpoena to Tether and Bitfinex.
Hoegner declined to comment on whether Tether or Bitfinex were under investigation by the CFTC or the DOJ. He also declined to share the contents of the subpoena.