The jig may be up for the Tether stablecoin following a trainwreck CNBC interview and regulators losing patience with the digital currency sector\u2019s aversion to oversight.\u00a0 Wednesday saw Tether\u2019s CTO Paolo Ardoino and general counsel Stuart Hoegner appear on CNBC\u2019s online program TechCheck, where host Dierdre Bosa peppered the pair with questions regarding the lack of transparency surrounding digital currency\u2019s largest stablecoin, as well as the \u2018Where\u2019s Waldo\u2019 tendencies of the company\u2019s CEO Jean-Louis van der Velde and CFO Giancarlo Devasini. https:\/\/www.youtube.com\/watch?vZBEqyiO35cQ Ardoino and Hoegner\u2019s participation was confirmed by Bosa less than 24 hours before showtime, which may have accounted for the paltry audience that tuned in to the livestream. The fact that Ardoino and Hoegner took part at all is notable in and of itself, as the pair generally prefer to give interviews only to obscure vloggers with audiences in the dozens. Regardless, the 30-minute segment could ultimately give rise to a new acronym, FABNAQ (frequently asked but never answered questions), as Bosa\u2019s more probing queries were routinely batted away by a mix of obfuscation, bafflegab and the visibly uncomfortable Ardoino\u2019s occasional cries of \u2018Look! A yeti!\u2019 before cutting his video feed long enough to mop his flop sweat. Hoegner, who often appeared to be reading from prepared cheat sheets\u2014or perhaps checking that Ardoino wasn\u2019t having a coronary\u2014dismissed Van der Velde and Devasini\u2019s absence by saying that the big cheeses were busy talking to \u201cthe people that matter.\u201d At any rate, here\u2019s what the B Team had to say to us peons. Audit? Odd, that\u2026 The key takeaway from the interview was Hoegner\u2019s claim that an audit\u2014not just another weak quarterly attestation by a rubberstamp Cayman Islands firm\u2014of Tether\u2019s true financial picture was in the works, with the timeline for completion measured in \u201cmonths, not years.\u201d For the record, Tether has been promising a proper audit for four years now\u2014roughly 48 months in the Hoegner vernacular\u2014so we\u2019ll believe it when we see it. Bosa noted that Tether previously utilized U.S.-based Friedman LLP as its auditor before that relationship \u2018dissolved\u2019 in January 2018 due to Tether\u2019s unhappiness with Friedman\u2019s \u201cexcruciatingly detailed procedures.\u201d Asked why Tether didn\u2019t opt for a familiar U.S. name this time around, Hoegner said Tether wasn\u2019t convinced that \u201ctrust is necessarily vested in one country or another.\u201d Hoegner claimed that Tether execs were \u201cleaders in transparency,\u201d despite the prevailing view that the only thing Tether and transparency have in common is the letter \u2018t\u2019. Asked why this public \u2018disconnect\u2019 existed, Hoegner pleaded ignorance, adding that USDT\u2019s popularity was sufficient evidence of the market\u2019s faith in Tether\u2019s dealings.\u00a0 Bear in mind that the New York AG\u2019s probe of Tether found that the company had a habit of \u2018borrowing\u2019 nine-figure sums from sister company Bitfinex the day before asking an accountant to verify that the cash in Tether\u2019s bank accounts matched the issued value of USDT. The day after that verification, Tether would transfer the sum back to the Bitfinex exchange and the shell game resumed. We suppose you could argue this was transparently dishonest, so we grudgingly concede the point to Hoegner.\u00a0 Papering over commercial concerns Much of Bosa\u2019s questioning focused on the assets backing the nearly US$62 billion in circulating USDT, around two-thirds of which was minted this year. Having previously claimed that each USDT had a matching U.S. greenback somewhere, Hoegner now claimed that each USDT was backed \u201cone-to-one with our reserves,\u201d which is a horse of a very different color. Tether\u2019s release in May of two pie charts\u2014the barest of minimums required by the company\u2019s $18.5 million settlement with New York\u2019s Attorney General\u2014revealed that Tether\u2019s cash reserves were a mere 3% of issued USDT, with the vast majority of reserves being commercial paper of unknown origin. Widespread suspicion that much of Tether\u2019s commercial paper was issued by Chinese firms of dubious distinction took on new urgency after Chinese regulators reportedly imposed new transparency requirements on issuers of commercial paper. Asked by Bosa how much exposure Tether had to Chinese commercial paper, Hoegner said only that Tether\u2019s portfolio \u201ccontains international commercial paper.\u201d Hoegner further claimed that the bulk of Tether\u2019s commercial paper was rated \u201cA2 or better \u2026 across multiple rating agencies.\u201d But when pressed on the Chinese component, Hoeger claimed \u201cwe guard our counterparty relationships with great discretion.\u201d Ardoino similarly evaded Bosa\u2019s pursuit of specifics by saying it was \u201cquite important to respect the privacy of the banking partners that we work with.\u201d This flies in the face of conventional money-market funds, which generally issue detailed breakdowns of their holdings, and also blows Titanic-sized holes in Tether\u2019s \u2018leaders in transparency\u2019 mantra. Tether liquidity not all that wet Hoegner claimed his company had \u201cnever refused a redemption by a Tether customer,\u201d but Tether\u2019s T&Cs permit redemption only to a \u2018verified customer,\u2019 aka exchanges and OTC traders. End users need to find a willing buyer on an exchange to convert USDT to anything usable in the real world. Furthermore, Tether reserves the right to delay withdrawals or redemptions depending on the \u201cilliquidity or unavailability or loss\u201d of any of Tether\u2019s sketchy reserves. On that note, Hoegner\u2019s attempt to set viewers\u2019 minds at ease regarding those reserves went somewhat awry when he claimed that Tether had enough cash on hand to cover \u201cour biggest 24-hour period of redemptions.\u201d Hoegner appeared utterly unaware that bragging about having one whole day\u2019s worth of liquidity on hand is perhaps not the greatest selling point for a financial institution boasting a $62 billion market cap. You can\u2019t spell security without \u2018SEC\u2019 While the general reaction to the Tether bros\u2019 CNBC appearance has been one of comedic disbelief, more serious challenges appear set to arise following Wednesday\u2019s speech by Gary Gensler, the newly appointed chairman of the Securities and Exchange Commission (SEC). Gensler warned purveyors of digital currency products, including any \u201cstable value token backed by securities,\u201d that a failure to abide by securities laws or refusal to work with securities regulators, um, won\u2019t end well. Gensler warned that the SEC would \u201cuse all the tools in our enforcement toolkit\u201d to ensure compliance\u2014real compliance, not the Binance \u2018we\u2019re on a journey\u2019 posturing\u2014is forthcoming. With Tether\u2019s attestations indicating its reserves are comprised mainly of commercial paper and corporate bonds, USDT appears to be the very definition of a tokenized security. As such, the SEC will likely be summoning Ardoino and Hoegner to conduct its own interview soon. Perhaps Tether\u2019s CEO and CFO might even attend this one, assuming that the SEC chair qualifies as a person that matters. Follow\u00a0CoinGeek\u2019s Crypto Crime Cartel\u00a0series, which delves into the stream of groups \u2014 from\u00a0BitMEX\u00a0to\u00a0Binance,\u00a0Bitcoin.com,\u00a0Blockstream,\u00a0ShapeShift,\u00a0Coinbase,\u00a0Ripple\u00a0and\u00a0Ethereum\u2014who have co-opted the digital asset revolution and turned the industry into a minefield for na\u00efve (and even experienced) players in the market.