KPMG Audited a Tether Entity That Was Not Every Holder's Counterparty

For one class of USDT holders, that entity did not become the contractual counterparty until 27 Jan 2025, four weeks into the year the audit covers. Tether's token terms of service carry a notice of assignment recording that before that date the terms formed a contract between certain users and Tether Limited, which then "assigned, granted, conveyed and transferred" its rights and obligations to Tether International. The same notice says that for users who were not previously contracted with Tether Limited there was no change in counterparty because Tether International Limited had simply redomiciled from the British Virgin Islands to El Salvador and been renamed. Tether has not said how many holders fell into each group.

Tether International, S.A. de C.V. is therefore the renamed Tether International Limited, one of four entities that settled with the US Commodity Futures Trading Commission (CFTC) in 2021 and a named defendant in a class action still before the courts.

The company's release describes an audit of Tether International's full balance sheet, covering the reserve assets and "the liabilities represented by the issued token," alongside its income statement, changes in equity and cash flows. The audit is explicitly stated as being carried out on the subsidiary rather than the whole company. Tether CEO Paolo Ardoino has said Tether International is the issuer of USDT and that the audit is therefore relevant to the reserves backing the stablecoin.

Tether has not published the KPMG opinion or the financial statements behind it, and KPMG has issued no statement of its own. Sandmark put questions to Tether about the counterparty change and to KPMG about the scope of the opinion. Neither had responded at the time of publication. This article will be updated with any response.

The entity behind the audited accounts

Tether International is described in the group's filings with the US Securities and Exchange Commission as a wholly owned subsidiary of Tether Global Investments Fund, S.I.C.A.F., S.A. The description appears in a Schedule 13D amendment filed on 30 Jul disclosing a 33.3mn-share stake in Vancouver-listed Gold Royalty Corp, representing 14.4% of the issuer. Those shares moved into Tether International on 24 Mar 2026, after the balance sheet date the audit covers.

Tether's terms are amended without notice and were last updated on 26 Feb 2026.

How opening balances were carried across from Tether Limited, and whether the audited statements carry a comparative prior period, would ordinarily appear in the notes to the accounts. No notes, accounting policies, reserve breakdown or related-party disclosures have been released.

Swan.com CEO Cory Klippsten cited the 30 Jul filing in a post on X on 13 Aug, arguing that the audited entity was a subsidiary and writing that "there is NO audit of @tether forthcoming." Swan and Tether have been in litigation since 2024 over a Bitcoin (BTC) mining joint venture, and Klippsten has said he intends to bring further proceedings against Giancarlo Devasini in England. Devasini is the CFO of Bitfinex and the named reporting person of Tether International, S.A. de C.V. on the SEC filings.

The International Consortium of Investigative Journalists reported on 7 Aug that Tether has never given a full public account of its ownership and did not answer its questions on the subject.

Two settlements that neither side contested

The KPMG audit comes after years of questions about the reserves backing USDT, including regulatory findings that the company had issued the stablecoin at a deficit and verified reserves after shifting funds from other accounts.

In Feb 2021 Bitfinex and Tether together agreed to pay $18.5mn in penalties to New York State, ending a 22-month investigation by the Office of the Attorney General (OAG) into whether the companies had concealed the loss of client and corporate funds. The OAG stated that from no later than mid-2017 Tether had no banking access anywhere in the world, and so held no reserves backing tethers one-to-one for periods of time. It stated in the filing that Tether published a self-described verification of its cash reserves in 2017 when the cash "had only been placed in Tether's account as of the very morning of the company's 'verification.'" A second verification on 1 Nov 2018, supported by a letter from Deltec Bank & Trust, was followed the next day by transfers of hundreds of millions of dollars out of Tether's accounts and into Bitfinex's.

Attorney General Letitia James said Tether's claim that its currency "was fully backed by U.S. dollars at all times was a lie." The settlement required both companies to cease trading with New Yorkers and to report quarterly on the composition of Tether's reserves for two years, the requirement that produced the quarterly attestation reports Tether has published since. Neither company admitted wrongdoing.

Eight months later the CFTC ordered Tether to pay a $41mn civil penalty, settling charges against four entities trading as Tether: Tether Holdings Limited, Tether Operations Limited, Tether Limited and Tether International Limited.

The Commission entered its order after accepting an offer of settlement in which the companies neither admitted nor denied its contents, so the findings are the regulator's own and were not contested before a judge. It stated that between 2 Sept 2016 and 1 Nov 2018 the fiat currency Tether held in its own accounts was less than the USDT in circulation on 573 of 791 days, leaving the tokens fully backed by those accounts 28% of the time. It alleged that reserves were held with unregulated third parties under at least 51 arrangements, only 22 of them documented by any contract, and that reserve funds were commingled with Bitfinex operational and customer money. Not only that, but it also found that in Nov 2018 Tether transferred $625mn of reserves to Bitfinex to meet what its own CFO called a "liquidity crisis," a transfer formalized as a credit facility in Mar 2019 and repaid in Jan 2021.

What the regulator said about earlier reviews

A section of the CFTC order headed "The Tether Reserves Were Not Audited" records that Tether's whitepaper, published from Apr 2015, told readers the company "undergoes regular professional audits." The Commission found that "no audit of the Tether Reserves occurred during or prior to the Relevant Period," and that two reviews were commissioned instead.

The first, in 2017, had an accounting firm check reserves against fiat held in Tether's name on 15 Sept 2017, "a date selected by Respondents and known to their principals ahead of the accounting firm's review." On that day, according to the order, Bitfinex transferred $382,064,782 into a bank account Tether International had opened that same day. The second, in 2018, used a law firm rather than an accounting firm to compare holdings in two bank accounts against tokens in circulation, after which Tether announced that the firm had "confirmed that all tether tokens in circulation as of that date were indeed fully backed by USD reserves." The order notes that in 2018 Tether stated publicly that professional audits were not obtainable at that time.

The order also records Tether's own representations, that it "maintained adequate reserves," that it "has not failed to satisfy a redemption request for tether tokens," and that it had since segregated operational funds from reserves and automated its balance tracking.

The class action is heading for judgment

A class action first filed in 2019 remains live. In re Tether and Bitfinex Crypto Asset Litigation is before Judge Katherine Polk Failla in the US District Court for the Southern District of New York, docket 1:19-cv-09236. Failla certified a class in modified form on 6 Mar 2026, covering purchases made between Mar 2017 and Feb 2019 and excluding futures bought on foreign exchanges and anyone who bought only on Bitfinex itself. The US Court of Appeals for the Second Circuit denied a motion to review that certification on or around 2 Jul 2026, leaving the case moving towards summary judgment.

The case alleges that the defendants "engaged in a sophisticated scheme to artificially inflate the price of crypto commodities by purchasing bitcoin and other crypto commodities with USDT that was not fully backed by U.S. dollars when the price of bitcoin was falling, creating the illusion of increased demand for crypto commodities, and thus driving up crypto commodity prices."

The defendants include Tether Holdings Limited, Tether Operations Limited, Tether Limited and Tether International Limited, now Tether International, S.A. de C.V., the entity whose accounts KPMG has audited. Contingent liabilities arising from litigation would ordinarily be described in the notes to a company's audited financial statements.

The surplus has fallen since the audited date

The figure KPMG signed off is now eight months old. Tether's second-quarter attestation, prepared by BDO Italia and published on 31 Jul, put assets at approximately $188bn against liabilities of $184bn as of 30 Jun, leaving excess reserves of $4.11bn. That is down from $8.2bn at 31 Mar and roughly 40% below the $6.8bn surplus in the audited accounts. Tether reported $1.5bn in net operating profit for the quarter and widened its lead over stablecoin rivals, alongside gold holdings above 146 tonnes.

An attestation is not an audit. It is a point-in-time report on figures management provides, without the testing, notes or opinion that a full audit carries. The distinction is the reason the KPMG opinion was significant news.

It is also the reason its absence matters. Tether has announced the existence of an unqualified opinion without publishing the opinion, the statements or the notes behind them. Every question the audit might have settled, how the counterparty change was accounted for, whether there is a comparative prior period, what the reserves consist of, what the litigation is provisioned at, sits in documents nobody outside the company has seen.