Justin Bons, founder and CIO of Cyber Capital, issued a scathing attack on Tether. In a series of X posts, he said USDT was involved in a $118 billion fraud and criticized the company for not providing evidence of its reserves and not having been formally audited since its inception.
1/17) Tether is a $118 billion scam. Bigger than FTX and Bernie Madoff combined!
There is no proof of reserves and it has never been audited. USDT is printing counterfeit banknotes (fraud)
Arrested for falsifying documents, concealing identity, and lying about reserves
Stop using USDT now. 🧵
— Justin Bons (@Justin_Bons) September 14, 2024
Although USDT continues to claim that it holds many assets, there has never been an audit to confirm this. This lack of transparency has been a problem for the crypto industry, with market participants having to rely on Tether’s claim that it has $118 billion in collateral, which has not been independently confirmed. .
Risks approaching Tether
Analysts say this is riskier than the collapse of Terra Luna and indicates a possible system-wide collapse. He pointed out that if something goes wrong with USDT, the consequences could be dire and affect the entire crypto industry.
Bonds also pointed to Tether’s past misconduct in handling financial matters. As of 2021, the Commodity Futures Trading Commission (CFTC) accused USDT of issuing false reports regarding reserves, although the latter has not been audited to date. However, as he emphasized, Tether has released an “audit report” with BDO, which does not amount to the full, unqualified audit the company has promised since 2015.
Other issues with USDT’s governance structure have also come into question. New information has emerged that only two directors control USDT Holdings, raising concerns about the safety and independence of the company’s reserves. This level of centralization means that a small number of individuals can control or exercise the entire operation, which is a threat to investors.
Controversial tether connection
He also expressed concerns about Tether’s connection to unnatural banking practices. Tether also has ties to Bitfinex, an exchange run by some of the same people involved in USDT, and a deal with Crypto Capital, a Panama-based bank accused of laundering money for drug cartels. The company’s relationship is also controversial. In 2019, Crypto Capital’s assets were seized, which left both Bitfinex and Tether in a highly vulnerable situation and called into question their operations.
Nevertheless, Bonds warns that USDT poses a threat to the crypto market as its market capitalization expands. He wants investors to switch their assets to safer and more transparent stablecoins, to be cautious and safe against potential market crashes.
Tether remains a major player in the stablecoin market, but more and more people are demanding transparency in the cryptocurrency industry. Recent allegations have further heightened concerns about Tether’s operations, with many questioning the market’s stability in the coming days.
