Justin Bons claims Tether lacks audits and openness.
Unverified $118 billion reserves raise concerns for Tether.
Tether is accused with money laundering.
Tether has been accused of not disclosing its $118 billion reserves. Cyber Capital Founder Justin Bons called it a greater swindle than FTX and Bernie Madoff.
He noted the lack of independent audits proving the company's reserves. Critics say it possesses USDT without evidence, casting doubt on its trustworthiness.
Despite promised a complete reserve audit since 2015, Tether has not disclosed it. It was fined by the CFTC in 2021. For filing bogus reserve claims and yet having no adequate regulation over the firm.
Many mistrust Tether's "transparency page." The company's purported reserves have never been audited.
Questionable Practices and No Audits
Despite being a crypto market leader, Tether has been accused of not having a thorough audit. In 2021, Tether and BDO issued a “auditor’s report.”
However, detractors contend this is not an audit. The business has also been accused of falsifying papers and reserve claims.
A big concern is that Tether does not clearly distinguish between its assets and customers. Thus preventing the public from verifying Tether's claims.
It sacked its first auditor in 2018 for being too critical, which seems odd. Since Tether Holdings has just two board members, centralization and conflict of interest are concerns.
Growing Concerns Over Tether's Crypto Market Role
USDT's market size and dominance are said to threaten the crypto industry. Tether's billions in assets raise concerns about market manipulation and unbacked tokens.
Bons says the USDT may experience a ‘bank run’ like Terra Luna. Its ties to other companies under investigation also cast doubt on it.
Since Tether and Bitfinex share management, their relationship has also been problematic. Crypto Capital, one of Bitfinex's former banks, was locked down by the U.S. for money laundering, casting doubt on Tether.
Alleged Illegal Activity
Tether has been linked to billions in sextortion and ‘pig butchering’ schemes. According to Bloomberg, blockchain analytics company Elliptic stated USD Coin has enabled over $11 billion in illicit transactions in three years.
Huione Guarantee is a popular platform. It allegedly facilitates unlawful trading using USDT. Fraudulent investment schemes like pig slaughtering employ Tether.
Fraudsters and their clients are also utilizing Huione and Tether to launder cash. Blockchain technology is intended to provide transparency, yet these frauds persist. The apparent cooperation of Tether has alarmed officials.
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