- In a recent bombshell, Cyber Capital founder Justin Bons has accused Tether of being the most prominent fraud in the history of cryptocurrency.
- Bons has criticized the company for its failure to carry out a proper audit since 2015, suggesting that the firm’s lack of transparency could potentially lead to a collapse reminiscent of Terra Luna’s downfall.
- Earlier this year, Tether, the issuer of USDT, was embroiled in legal troubles, including a lawsuit filed by Celsius Network, alleging fraudulent Bitcoin transfers amounting to $3.5 billion.
Discover the controversial claims surrounding Tether, including allegations of fraud and lack of transparency, and explore the potential implications for the crypto market.
Tether’s Lack of Transparency Under Scrutiny
Justin Bons has labeled Tether the largest fraud in cryptocurrency, emphasizing that the company’s lack of transparency and failure to conduct a legitimate audit is a critical issue. Bons asserts that Tether’s reserves remain unverified, amplifying the risk to the broader crypto market. Despite promises made since 2015, no audit has ever been performed, prompting Bons to call USDT “counterfeit money.”
Concerns Over USDT’s Potential Collapse
Bons warns that the extensive use of USDT in the crypto market could result in catastrophic consequences if the stablecoin were to collapse. Drawing parallels to the Terra Luna catastrophe of 2022, he highlights the significant risk posed by the issuer’s questionable reserve backing. Tether’s reserves, assumed to be backed by equivalent dollar amounts, have never been independently audited, creating a substantial threat to market stability.
Financial Audits and Governance Woes
One of the major sticking points in Bons’ argument is Tether’s approach to financial audits. In 2018, an auditor was allegedly dismissed for being too thorough, and while the company partnered with BDO in 2021 for a report on reserves, Bons criticized this as not reflective of a formal audit’s rigor. Furthermore, concerns about Tether Holdings’ governance have been raised, with only two board members, which could lead to mismanagement.
Historical Allegations and Legal Challenges
Bons has also tied Tether’s operations to questionable past activities, including associations with Crypto Capital, a Panama-based bank involved in money laundering for drug cartels. Tether’s founders have been linked to previous Ponzi schemes and disreputable banking practices, according to Bons. In addition, Tether continues to face legal pressures, including a lawsuit from Celsius Network accusing it of fraudulent Bitcoin transfers valued at $3.5 billion. Despite denials from Tether’s CEO, Paolo Ardoino, these challenges exacerbate the company’s precarious position.
Conclusion
As Bons’ explosive allegations bring Tether’s operations into the spotlight, it underscores the urgent need for transparency and proper auditing within the crypto industry. The potential collapse of USDT due to unverified reserves could have far-reaching repercussions. For the crypto community, these revelations serve as a stark reminder to demand accountability and credible practices from token issuers to safeguard the market’s stability.
