Justin Bons alleges that Tether is deficient in transparency and audits. Tether’s unverified $118 billion reserves are a source of increasing concern.
There have been allegations that Tether operates without sufficient transparency regarding its $118 billion reserves. Justin Bons, the founder of Cyber Capital, stated that it is a more substantial fraud than FTX and Bernie Madoff.
He emphasized the lack of independent audits that would substantiate the company’s reserves. There are numerous concerns regarding the credibility of the asset, as critics assert that it possesses USDT without evidence.
Although Tether has been promising to disclose the comprehensive audit of its reserves since 2015, it has yet to do so. In 2021, the U.S. Commodity Futures Trading Commission (CFTC) imposed penalties on it. This was for giving false information about its assets, and the company is still not properly regulated.
A significant number of individuals are questioning the legitimacy of Tether’s “transparency page.” Due to the absence of any audits, it displays the organization’s purported reserves.
Despite its status as one of the most prominent players in the cryptocurrency market, Tether has been accused of failing to conduct a comprehensive audit. Tether and BDO issued a “auditor’s report” in 2021.
However, detractors contend that this is not equivalent to an audit. The company has also been accused of submitting fraudulent documents and making deceptive claims about the amount of assets it has in reserves.
Another significant concern is that Tether fails to establish clear distinctions between its assets and its clients. Consequently, the broad public is unable to verify Tether’s statements.
It terminated its initial auditor in 2018, attributing the termination to an excessively critical approach, which may be considered dubious. Given that Tether Holdings has only two board members, there are also concerns about centralization and potential conflicts of interest.
There is a contention that the market capitalization and dominance of USDT pose a threat to the remainder of the crypto market. People are apprehensive about market manipulation and the creation of new tokens without evidence of their support due to Tether’s billions in assets.
According to Bons, the USDT is also susceptible to a “bank run,” as was the case with Terra Luna. Additionally, the company is in a precarious position due to its affiliations with other organization’s that are also under investigation.
The shared administration of Tether and Bitfinex has also been a source of contention. In addition, the credibility of Tether was called into doubt when U.S. authorities closed Crypto Capital, one of Bitfinex’s previous banks, for money laundering practices.
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