Completely fraudulent?

Nobody outside of tether really knows until there's some sort of audit.

But the secrecy, false claims of regular auditing etc. don't look good from here.

Bitfinex hired Friedman LLP to audit them.

Friedman only gave a report explicitly specifying "THIS IS NOT AN AUDIT" because Bitfinex wouldn't provide the documents and access beyond simple statements.

Friedman LLP recently removed all mention of ever having been involved with Bitfinex from their webpage.

Previously visible here:

http://archive.li/xbhxI

http://www.friedmanllp.com/insights/auditor-engagement

The Bloomberg article states that Friedman was issued a subpoena from the CFTC, at the same time Bitfinex was subpoenaed.

  Friedman LLP, a New York-based auditing firm, was also 
  subpoenaed by the CFTC after Tether hired it last year to 
  assess claims that Tether held enough U.S. dollars, 
  according to a person familiar with the matter.