In a fiery altercation on X platform, Justin Bons, the founder of Cyber Capital, made damning accusations against Tether, labeling it as the most massive fraud in crypto history. Bons asserted that the controversies surrounding the stablecoin issuer have outstripped those of FTX and Bernie Madoff combined. He cautioned that Tether’s opacity and failure to undergo a proper audit pose a substantial risk to the cryptocurrency market.
Describing Tether as a deceptive entity totaling $118 billion, Bons emphasized its deceptive practices, such as the absence of reserve verification and reluctance to subject to an independent audit. Despite assurances of an audit dating back to 2015, Bons highlighted the lack of any actual audit being conducted, branding USDT as “phony money.”
With Tether continuing to hold a prominent position as one of the most utilized stablecoins in the industry, Bons urged the crypto community to steer clear of it, citing the potential for a catastrophic collapse. Drawing parallels to the calamitous downfall of Terra Luna in 2022, Bons emphasized the heightened stakes involved in Tether’s potential failures due to its significant circulating USDT tokens, allegedly backed by equivalent dollar reserves without credible verification.
Bons criticized Tether’s history with regulatory authorities and highlighted the company’s unresolved financial audit issues. He noted instances where auditors were allegedly dismissed for being too meticulous and criticized the firm’s partnership with BDO in 2021, denouncing it as insufficient. Bons expressed doubts about the absence of a legitimate third-party audit verifying Tether’s reserves.
Furthermore, Bons raised concerns about Tether Holdings’ governance structure, pointing out its minimal board membership and suggesting vulnerabilities to mismanagement. In addition, he connected Tether to past illicit activities, including ties to Crypto Capital and individuals with questionable backgrounds.
The allegations against Tether unfolded amidst ongoing legal challenges faced by the stablecoin issuer. A lawsuit filed by Celsius Network Ltd. accused Tether of fraudulent transfers, exacerbating Celsius’ financial woes. Contrary to the allegations, Tether CEO Paolo Ardoino dismissed the lawsuit as a “shake down.” Simultaneously, former FTX CEO Sam Bankman-Fried pursued a retrial, alleging biased rulings by Judge Lewis Kaplan that hampered his defense.
Despite mounting criticisms and legal entanglements, Tether, along with Circle and other stablecoin issuers, took measures to blacklist accounts linked to the North Korean hacker group Lazarus. This step highlighted Tether’s commitment to combating illicit activities, showcasing efforts amid concerns regarding transparency and legal troubles.