Justin Bons, founder and CIO of Cyber Capital, has made serious accusations against Tether. In a series of posts on X, he claimed that USDT was involved in a $118 billion fraud and criticized the company for not providing evidence of its reserves and for not undergoing a formal audit since its inception.
While USDT continues to claim that it holds many assets, no audit has ever been conducted to confirm this. This lack of transparency is problematic for the cryptocurrency industry, as market participants must rely on Tether’s claims that it has $118 billion in collateral, which has not been independently confirmed.
Tether’s Looming Risk
The analyst notes that this is a higher risk than the collapse of Terra Luna, indicating a potential systemic failure. He noted that if something goes wrong with USDT, the consequences could be disastrous and affect the entire cryptocurrency sector.
Bons also highlighted Tether’s past misconduct in financial affairs. In 2021, the Commodity Futures Trading Commission (CFTC) accused USDT of issuing false reports on its reserves, but these have not been audited to date. However, as he pointed out, Tether has issued an “audit report” with BDO, but this does not amount to the full, unqualified audit the company has been promising since 2015.
Other issues with USDT’s governance structure also make it suspect. New information has surfaced that only two board members control USDT Holdings, raising concerns about the security and independence of the company’s reserves. This level of centralization means that a few individuals may have control or exert control over the entire operation, posing a threat to investors.
Tether’s controversial connections
He is also concerned about Tether’s ties to questionable banking practices. Tether also has ties to Bitfinex, an exchange operated by some of the same people involved in USDT, and the company’s dealings with Crypto Capital, a Panama-based bank accused of laundering money for drug cartels, have also sparked controversy. In 2019, Crypto Capital’s assets were seized, putting Bitfinex and Tether in a very vulnerable position that has raised questions about their operations.
However, Bons warns that with the growth of USDT’s market capitalization, USDT poses a threat to the cryptocurrency market. He wants investors to move their assets to safer and more transparent stablecoins and also to be cautious and safe from a possible market crash.
While Tether remains the dominant player in the stablecoin market, more and more people in the cryptocurrency world are calling for more transparency. The recent allegations have further increased concerns about Tether’s operations, with many wondering how stable the market will be in the days to come.
