Justin Bons' criticisms are supported by data and information that suggests that Tether's USDT token may not be fully backed by real reserves.
Tether collapse (image: (MidJourney Livecoins)
Justin Bons, founder of Cyber Capital, Europe's oldest cryptocurrency fund, has harshly criticized Tether, the largest stablecoin on the market, and made serious accusations about the company behind the digital currency.
In a lengthy thread on X (Twitter), the businessman claimed that Tether operates a true scam, bigger than the collapse of FTX and Bernie Madoff's Ponzi scheme combined.
According to him, Tether has never undergone a complete and independent audit of its reserves, despite promising such a measure since 2015, leaving the market on alert regarding the company's real solvency.
⚠️ Tether collapse could devastate the cryptocurrency market
Justin Bons' criticisms are supported by data and information that suggests that Tether's USDT token may not be fully backed by real reserves.
Although the token has remained stable at $1 since its creation, the lack of a formal audit and reliance on the word of the Tether team alone raises questions about the company's true financial situation.
The businessman said that the biggest risk is that, without external guarantees, a possible mass sale of the currency (“bank run”) could cause a collapse in the entire crypto market, causing billion-dollar losses to investors.
Another point he raised is that Tether, even after being fined by the CFTC in 2021 for falsifying documents and mismanaging funds, continues to operate without supervision.
The fund that attempted to audit the company in 2018 was reportedly fired for being “too thorough.” In addition, the entrepreneur claimed that Tether’s recent report, published in partnership with BDO in 2021, was not a full audit but rather an “accountant’s report,” leaving many questions open about the reserves the company claims to have.
🚨Tether has questionable reserves, says Cyber Capital founder
The founder of Europe's oldest cryptocurrency fund made at least 8 criticisms against Tether, and his long text on X (twitter) can be summarized as follows:
🏦 $118 Billion Scam — Bigger than FTX and Bernie Madoff combined.
❌ No real audits — Promise of audit since 2015 never fulfilled.
💸 Dubious reserves — Lack of evidence that USDT is backed.
⚠️ Risk of collapse — Potential for bankruptcy greater than that of Terra Luna.
🕵️ Document forgery — Tether has been accused of lying about its reserves.
👥 Limited Governance — Tether's board has only 2 members with full control.
🔗 Link to crime — Founders involved in Ponzi schemes and money laundering.
📉 Crypto Market Risk — A Tether collapse could devastate the ecosystem.
Justin Bons (X Twitter)
It’s worth noting that several concerns about Tether aren’t unique to Justin Bons. Consumers’ Research, a consumer rights organization, has also raised concerns about Tether’s business model, which they say exposes users to significant risks.
Despite all the criticism, USDT remains the most widely used stablecoin in the world, functioning as the main entry and exit ramp for fiat money on several cryptocurrency exchanges.
Tether continues to make billions of dollars in profits annually, reporting $12.72 billion in net profits as of Q4 2022, outperforming even major asset management firms like BlackRock.
However, criticism regarding Tether's transparency continues to grow. The businessman also mentioned the lack of reserve segregation, stating that two members of Tether's board, Giancarlo and Ludovicos, have full control over the company, increasing market distrust.
🏦 Tether founders involved in scams
He also brought to light the controversial past of some of the company's founders and executives, including ties to Ponzi schemes and even criminal activity linked to drug trafficking.
🔗 Connection with the offshore bank Crypto Capital
Tether and its sister company Bitfinex have been linked to Crypto Capital, an offshore bank in Panama. The bank has been accused of laundering billions of dollars for Colombian drug cartels. In 2019, U.S. federal authorities froze its assets and shut it down.🏦 Involvement in money laundering
Tether’s founders have been accused of using Crypto Capital to launder money, allowing funds from illicit activities to be moved discreetly. This included large sums from drug trafficking.
💰 US$850 million “lost”
Bitfinex and Tether have faced an $850 million loss after Crypto Capital’s funds were frozen. To cover the loss, Tether issued USDT, raising questions about the stablecoin’s real backing.⛓️ Connections with scams
Some of the founders ofTether has a history of involvement in Ponzi schemesand bank fraud, which adds further suspicion to the company's practices. However, despite the accusations and investigations, many of those involved are stillwere not convicted.🛑CFTC and Lies about Reserves
In 2021, the U.S. Commodity Futures Trading Commission (CFTC) fined Tether $41 million for lying about its reserves, claiming that USDT was fully backed when it was not.
Tether has not yet responded to the businessman's accusations, but continues to defend its transparency and profitability.
Still, pressure is mounting on the company to provide clear proof of its reserves. The concerns raised by Bons and other critics could shake market confidence in the stablecoin, prompting investors to reconsider USDT in favor of more transparent alternatives.
