Massive Scam or Stablecoin? Cyber Capital Founder’s Damning Evidence Against Tether’s $118 Billion

Cyber Capital Founder Exposes Tether's Lack of Audits and Transparency

Justin Bons, founder of Cyber Capital, Europe’s oldest crypto fund, has come forward with explosive claims against Tether, the largest stablecoin issuer in the market.

In a tweet thread on X (formerly Twitter), Bons didn’t hold back, describing Tether as a “$118 billion scam, bigger than FTX and Bernie Madoff combined!”

His sharp critique comes with a pointed accusation that Tether has failed to provide any legitimate proof of reserves or conduct a proper audit since 2021.

According to Bons, the stablecoin company is printing “counterfeit money,” which threatens the integrity of the entire crypto ecosystem.

Bons highlighted that Tether has consistently promised an audit since 2015, yet it continues to fall short.

He stated,

“No proof of reserves & an audit has never been done; USDT is printing counterfeit money (fraud).”

The crypto veteran stressed that, despite Tether’s massive $118 billion in reported assets, there is no verifiable evidence supporting this figure.

He pointed out that the first firm tasked with auditing Tether in 2018 was fired, which Bons considered highly suspicious.

Instead, Tether has relied on issuing an “auditor’s report,” which Bons firmly asserted is not equivalent to an actual audit, further casting doubts over Tether’s legitimacy.

Tether's Elusive Audits: A Long History of Broken Promises

Since 2015, Tether has promised the public an independent audit of its reserves, yet no such audit has ever materialised.

In 2021, Tether faced penalties from the U.S. Commodity Futures Trading Commission (CFTC) for submitting false claims about its reserves.

Despite this regulatory action, the company continues to operate without providing the exhaustive proof it once promised.

Bons said,

“This means we have to take their word for the vast majority of reserves, as they cannot be independently verified.”

Tether’s relationship with auditors has been tumultuous.

Bons revealed that in 2018, the company fired its first auditor for being too thorough.

The company's subsequent partnership with BDO in 2021 resulted in what Bons described as a mere “auditor’s report,” which he firmly claims does not meet the standards of a full audit.

Such practices raise questions about Tether’s intent and transparency, leaving investors skeptical about the true state of its reserves.

Market Dominance and Unchecked Power: USDT’s Threat to Crypto

Tether's growing market influence has raised significant concerns, with warnings of a potential "bank run" akin to the Terra Luna collapse.

The USDT stablecoin is crucial in cryptocurrency exchanges, acting as a fiat on/off ramp globally.

Given the billions of dollars tied to USDT, any instability within the company could severely impact the broader market.

Bons has highlighted that Tether's dominance creates an environment susceptible to market manipulation, as the firm may issue new tokens without transparent backing.

He has raised alarms about Tether’s potential collapse, suggesting it could surpass the impact of Terra Luna.

Bons highlights the risks associated with USDT’s lack of transparency and proof of reserves, emphasising the threat this poses to the entire crypto market.

The relationship between Tether and Bitfinex, a major cryptocurrency exchange, adds to these concerns.

The shutdown of Bitfinex’s previous banking partner, Crypto Capital, by U.S. authorities over money laundering charges further casts doubt on Tether’s operations.

Tether’s Shady Connections: The Bitfinex Relationship and Regulatory Scrutiny

Tether and Bitfinex have long been intertwined, with common management at the helm of both companies.

This relationship has led to increased scrutiny from regulators, particularly after Bitfinex’s previous bank, Crypto Capital, was closed by U.S. authorities over allegations of money laundering.

Bons pointed out that this connection should raise serious concerns about the legitimacy of Tether’s operations.

Critics also point to Tether’s involvement with controversial platforms like Huione Guarantee, which has allegedly facilitated illicit trades where USDT has been the preferred currency.

Reports claim that Huione has been involved in “pig butchering” scams, a type of fraudulent investment scheme, further highlighting the potential risks Tether poses to the crypto market.

Illegal Activities and Criminal Transactions: USDT’s Dark Underbelly

Tether’s controversial practices extend beyond its auditing issues, with the stablecoin being linked to various illegal activities.

Blockchain analytics firm Elliptic reported that USDT has facilitated over $11 billion in criminal transactions over the past three years.

Tether's involvement in schemes such as “pig butchering” scams and sextortion has further tarnished its reputation.

Despite blockchain’s promise of transparency, these fraudulent activities persist, with Tether frequently being used for money laundering.

Justin Bons has voiced strong concerns about Tether’s operations, describing it as a massive fraud.

He has accused the stablecoin issuer of lacking proof of reserves and failing to conduct an independent audit, labelling USDT as “counterfeit money.”

Bons warns that the unchecked power of Tether could have catastrophic effects on the market.

Consumers’ Research Joins the Criticism, Calling Out Tether’s Business Model

Adding to the chorus of critics, the advocacy organisation Consumers’ Research recently slammed Tether for exposing USDT users to significant risks.

The firm raised concerns over Tether’s opaque business model, which leaves users vulnerable to a potential collapse.

Despite these criticisms, Tether remains one of the most profitable firms in the crypto space.

According to recent reports, the company posted a staggering $12.72 billion in net profits since Q4 2022, surpassing even the giant asset management firm BlackRock.

Tether continues to operate as a vital cog in the crypto world, maintaining its role as a fiat on/off ramp for users across most exchanges.

However, the mounting criticism and accusations of fraud have led many to question whether this dominance is sustainable in the long term.

Is Tether the Next FTX?

Bons’ warnings have drawn eerie comparisons between Tether and past scandals like FTX and Bernie Madoff’s Ponzi scheme.

The potential collapse of Tether could, in Bons’ words, be “bigger than Terra Luna,” with billions of dollars at stake.

The lack of an independent audit and the company's history of firing critical auditors only deepens concerns.

If Tether were to collapse, the ripple effect would likely be catastrophic for the entire crypto market.

For now, Tether continues to claim full transparency, with its tokens allegedly pegged at a 1-to-1 ratio with fiat currency.

But as more voices join the call for proof, the pressure on Tether to deliver an independent audit grows.

Bons’ explosive allegations have brought new attention to the stablecoin issuer, and whether the company can survive the mounting scrutiny remains to be seen.