Cyber

<p>There are mounting investor concerns around the issuer of the world’s largest stablecoin USDT. Justin Bons, the founder and CIO of Cyber Capital recently shared his concerns in a series of texts on X over how Tether is a potentially bigger scam than FTX.</p>   
<h2 class="wp-block-heading" id="h-tether-a-biggest-threat-to-crypto"><strong>Tether, a Biggest Threat to Crypto?</strong></h2>   
<p>Bons wrote in a September 14&nbsp; X <a href="https://x.com/Justin_Bons/status/1834994495676404018" target="_blank" rel="noreferrer noopener nofollow">post </a>- </p>   
<blockquote class="wp-block-quote">
  
 <p>“Tether is one of the biggest existential threats to crypto as a whole. As we have to trust they hold $118B in collateral without proof! Even after the CFTC fined Tether for lying about their reserves in 2021.”</p> 
</blockquote>   
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper">
   https://twitter.com/Justin_Bons/status/1834994495676404018 
 </div>
</figure>   
<p>In 2021, the United States CFTC fined Tether a $41 million civil monetary penalty for lying about USDT being fully backed by reserves. Bons shared in his X post that “the 2021 CFTC fine was a settlement to end an investigation into an alleged loss of $850 million in commingled client &amp; corporate funds.” </p>   
<h2 class="wp-block-heading" id="h-concerns-over-tether-s-collapse"><strong>Concerns Over Tether’s Collapse</strong></h2>   
<p>Concerns over the stablecoin giant’s influence over the crypto space increased recently after data revealed that <a href="https://x.com/tokenterminal/status/1835661598200942987" target="_blank" rel="noreferrer noopener nofollow">Tether’s market share surpassed 75% </a>of the entire stablecoin market after a 20% increase over the past two years.&nbsp;</p>   
<p>One of the biggest worries stems from a major unexpected event in the industry - the startling <a href="https://coinpedia.org/news/why-did-ftx-collapse-bankman-fried-reveals-all/" target="_blank" rel="noreferrer noopener">collapse of the FTX exchange</a>, which resulted in a staggering $8.9 billion loss of user funds. While FTX’s collapse was due to its inability to honor the mass customer withdrawals of $6 billion within three days, a hypothetical Tether collapse would be related to its banking partners, according to Sean Lee, the co-founder of IDA Finance.</p>   
<p>On the other side, some believe that Tether is too large to fail. Notably, Anndy Lian, author, and intergovernmental blockchain expert, doesn’t expect Tether to face issues but warned that generally, large centralized entities could pose a risk for the cryptocurrency space.</p>   
<h2 class="wp-block-heading" id="h-increasing-concerns-over-tether-s-transparency"><strong>Increasing Concerns Over Tether’s Transparency</strong></h2>   
<p>Bons also shed light that Tether's recent investment in Adecoagro provided the first disclosure into its governance. The board of Tether Holdings only has 2 members; Giancarlo &amp; Ludovicos, which implies that the USDT reserves are still not segregated in 2024 &amp; the two of them have absolute control.&nbsp;</p>   
<p>IDA Finance’s co-founder, Lee, was also concerned about Tether’s lack of transparency. He wrote: </p>   
<blockquote class="wp-block-quote">
  
 <p>“Tether is structured as a business and their insistence on not providing the level of detailed transparency that ensures real trust from the community and institutional players is indeed concerning.”</p> 
</blockquote>   
<p>Despite Tether boasting over $118 billion worth of reserves in its second quarter “independent attestations conducted by BDO,” Cyber Capital’s Bons asserts that Tether has yet to submit its reserves for a third-party audit.</p>   
<h2 class="wp-block-heading" id="h-the-unaudited-reserves-of-usdt"><strong>The Unaudited Reserves of USDT</strong></h2>   
<p>Bons stressed that there has never been an audit of USDT, despite promising to do so since 2015. “This means we have to take their word for the vast majority of reserves, as they cannot be independently verified,” he stated. He also highlighted that the first firm to attempt an audit even got fired for being too thorough in 2018.</p>   
<p>He claimed that an </p>   
<blockquote class="wp-block-quote">
  
 <p>‘Auditor’s Report’ or an ‘Accountant Report’ is not a formal audit at all and despite the claims, Tether has never submitted its alleged reserves to a real unrestricted, third-party audit.&nbsp;</p> 
</blockquote>   
<p>Bons claims that “This all only scratches the surface of the Tether story. It is an iceberg of corruption, conspiracy &amp; crime, with its tendrils reaching everywhere.”</p>   
<p><strong>The uncertainty and lack of transparency surrounding Tether emphasizes the urgent need for enhanced scrutiny and transparency in the crypto space.&nbsp;</strong></p>   
<p><strong>Stay Tuned to know more.</strong></p>   
<p>Also Check Out : <a href="https://coinpedia.org/news/peter-schiff-declares-gold-the-winner-is-bitcoin-losing-its-shine/" target="_blank" rel="noreferrer noopener">Bitcoin vs Gold Investment: Here’s What Investors Should Choose</a></p>

Coinpedia Fintech News

Table of Contents

CoinPedia News

Other articles published on Sep 20, 2024

Hedera Joins MiCA Crypto Alliance with Ripple and Aptos, Launches Asset Tokenization Studio

Circle and Sony Block Solutions Labs Partner to Boost USDC Adoption on Soneium

Hedera Becomes Founding Premier Member of Linux Foundation’s New Decentralized Trust Initiative

iMe Smart Platform Responds to BingX Security Breach, Plans $LIME Token Buyback

20,000x ROI Potential: BlockDAG’s X1 & X10 Miners To Make Users Crypto Millionaires? ICP Prices U...

Revolutionizing the Meme Coin Space With a Blend of Fun, Community Engagement, and Real-world Uti...

Join our free newsletter for daily crypto updates!