Justin Bons believes that the activities of one of the largest stablecoin issuers may turn out to be a larger financial scam than the case of the infamous cryptocurrency exchange FTX. The expert fears that if Tether collapses, the negative consequences of this event will exceed all pessimistic forecasts.
“Tether is one of the biggest existential threats to the crypto industry as a whole. How are we supposed to believe they hold $118 billion in collateral without proof? And this is after the CFTC already fined Tether for lying about their reserves,” wrote Bons on social network X.
He recalled that in 2018, Tether announced an audit of its reserves and even hired an independent audit firm to do so. However, the results of the audit were hidden from the public, and the contract with the audit firm was unilaterally terminated, as it showed that Tether’s reserves consisted of commercial paper of unknown origin, quality and liquidity.
Founder of Cyber Capital addedthat in addition to reserves of dubious quality, Tether has an imperfect, opaque and clearly centralized management structure, and its strategic decisions are directly dependent on the subjective opinions of a limited number of managers who have absolute power.
Andy Lian, an intergovernmental blockchain expert, disagrees with Justin Bones. She believes that Tether is too big to suddenly fail, and that all large centralized players in the industry can pose a risk to the crypto space to some degree.
Lian was joined by IDA Finance co-founder Sean Lee, who said that FTX’s collapse was caused by the exchange’s inability to process $6 billion in mass customer withdrawals over three days. Tether processed more than $16.7 billion in USDT withdrawals over 10 days without any apparent issues.
Earlier, consumer advocacy group Consumers Research released a report accusing Tether of being opaque and not fully auditing its dollar reserves. Consumers Research analysts said the USDT stablecoin received a stability rating of “4 out of 5” in the S&P Global rating, where “5” is the worst rating.
Source: Bits
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