Tether Faces Fraud Allegations, Raising Fears of a Crypto Market Collapse
Cyber Capitals founder and CIO Justin Bons has leveled severe accusations against Tether. In a series of X posts, he said that USDT is engaged in a $118 billion fraud, and criticised the company for not providing evidence of its reserves and having not undergone a formal audit since its establishment.
While USDT keeps on claiming that it holds lots of assets, there has never been an audit done to confirm this. This lack of transparency is problematic for the crypto industry, as market players are left to rely on Tethers claims of having $118 billion in collateral, which has not been independently confirmed.
Tethers Looming Risk
The analyst notes that this is a higher risk than the Terra Luna collapse, indicating a potential systemic failure. He noted that should something going wrong with USDT, the consequences could be disastrous and affect the entire cryptocurrency industry.
Bons also pointed to Tethers past misconduct in handling financial affairs. As of 2021, the Commodity Futures Trading Commission (CFTC) accused USDT of issuing false reports of its reserves, but the latter has not been audited yet to this date. However, as he underlined, Tether released an auditors report together with BDO, but this is not equivalent to the full, unqualified audit that the company has been promising since 2015.
Other issues with USDT governance structure also make it suspicious. New information has emerged that only two board members control USDT Holdings, which has led to concerns on the companys reserves security and independence. This level of centralization means that a few individuals can have control or exert control over the whole operation and this poses a threat to investors.
Tethers Controversial Connections
He also raises concern over Tethers affiliations with sketchy banking methods as well. Tether also has links with Bitfinex, an exchange which is operated by some of the same people who are involved with USDT and the companys affairs with Crypto Capital, a Panama based bank that is accused of money laundering for drug cartels has also sparked controversies. In 2019, Crypto Capitals assets were seized and this put both Bitfinex and Tether in a very vulnerable situation which raised questions regarding their operations.
Nevertheless, Bons warns that with USDT market capitalization growing, USDT poses a threat to the cryptocurrency market. He wants investors to switch their assets to a more secure and more transparent stablecoins and also to be cautious and safe from a potential market crash.
While Tether remains the main player in the stablecoin market, more and more people in the cryptoverse call for transparency. The recent allegations have further raised concerns on Tethers operations with many people wondering on the stability of the market in the coming days.
Read more: https://www.tronweekly.com/tether-faces-fraud-allegations-raising-fears/
Text source: TronWeekly
