David Edwards
In a highly charged series of posts on X (formerly Twitter), Justin Bons, the founder of Cyber Capital, accused Tether of orchestrating what he claims is the largest fraud in cryptocurrency history. According to Bons, the scale of Tether’s alleged misconduct surpasses even the infamous collapses of FTX and Bernie Madoff’s Ponzi scheme. Bons raised concerns over the company’s lack of transparency and its failure to conduct a comprehensive audit, warning that Tether could pose a severe threat to the broader cryptocurrency market.
Justin Bons Labels Tether a “Scam”
“Tether is a $118 billion scam, bigger than FTX & Bernie Madoff combined!” Bons proclaimed, highlighting his concerns over Tether’s alleged failure to provide verifiable proof of reserves or submit to an independent audit. Despite the company’s promises dating back to 2015, Bons stressed that “no audit has ever been done,” going so far as to call Tether’s USDT stablecoin “counterfeit money.”
A Dire Warning to the Crypto Market
As USDT remains one of the most widely used stablecoins in the market, Bons issued a stark warning to the cryptocurrency community, urging them to reduce reliance on the token before a potential collapse ensues. He drew parallels between Tether’s situation and the catastrophic failure of Terra Luna in 2022, cautioning that Tether’s downfall could trigger even more severe consequences. Tether’s billions of circulating USDT tokens, which are assumed to be backed by dollar reserves, lack any formal independent verification. “We have to trust they hold $118 billion in collateral without proof!” Bons remarked, underscoring the opacity surrounding the company’s reserves.
Tether has previously faced regulatory action, including a $41 million fine from the U.S. Commodity Futures Trading Commission (CFTC) in 2021 for misleading claims regarding its reserves. Yet, despite this, Bons emphasized that no comprehensive audit of the company’s financials has ever taken place.
Concerns Over Financial Audits
Bons also highlighted alleged issues with Tether’s auditing practices. In 2018, according to Bons, an auditor was dismissed for being “too thorough.” While Tether did partner with accounting firm BDO in 2021 to release a report on its reserves, Bons criticized the document as a mere “accountant’s report” rather than a formal audit. He emphasized that such reports lack the scrutiny required for full transparency, stating, “Tether has never submitted its alleged reserves to a real unrestricted, third-party audit!”
