MHA Cayman’s Latest Attestation Report ‘Going Concern’ Indicating Significant Uncertainty of Stablecoin

Tether’s Q1 2022 assurance report shows that after a week of losses of 1:1 peg against the US dollar, Tether has reduced its commercial paper by 16.8% in its USDT reserves.

As of March 31, 2022, 86% of Tether’s $82 billion of reserves was cash and cash equivalents, with the rest consisting of $4 billion in corporate bonds, $3 billion in secured loans, and $5 billion in other investments such as cryptocurrencies. .

Recent research as of March 31 also shows that $83 billion in Tether assets was held in potentially illiquid instruments, including commercial paper and certificates of deposit, money market funds, secured loans, corporate bonds, and more.

Tether’s accounting firm MHA Cayman, responsible for Tether’s audit reports, adds new accounting language such as ‘going concern’. Which indicates significant uncertainty about the valuation of Tether’s assets and the counterparty risks they face.

Tether has gone through a sharp contraction since the May 9/10 collapse of the Terra stablecoin, with Tether assets falling from $83 billion on May 11 to $73 billion on May 21. That was a loss of about $10 billion for Tether in just ten days.

The latest verification report, released on May 18, pertains to Tether assets and liabilities as of March 31. MHA Cayman, an accountant added a new language that uses the language as a ‘going concern’, suggesting uncertainty about the future prospects of stablecoins.

Going concern is a form of the term meaning that a business is still fairly stable and can meet its obligations for some time.

MHA Cayman said that:

“Significant management decisions are needed in relation to the ongoing concern assessment” [Tether] Group’s liquidity, market and credit risk. We do not make any assurances with respect to such assessments.”

The latest verification report provides information on the not providing any provision for credit losses incurred by Tether’s management at the reporting date. As in the earlier verification, the accountant has mentioned that the loans were valued at fair value.

Furthermore, Tether has repeatedly promised an audit, but has so far failed to produce one. In the month of July, the stablecoin general counsel promised an audit within a month. Last week, a Massachusetts senator, Elizabeth Warren, also called for a cryptocurrency crackdown. where he has criticized the lack of protection for ordinary investors.

Furthermore, in his remarks to the US Senate Banking Committee, he has called out Tether for its lack of disclosure.

Asking: “Why don’t they want investors to know what is and is not backed by this so-called stablecoin? That is a huge red flag,” he added.