“The transparency and structure of Tether’s business are cause for concern and bring back memories of the FTX collapse. This is stated in the thread of the founder of Cyber Capital, Justin Bones. 2/17) The potential for collapse here is greater than Terra Luna! Making it one of the biggest existential threats to crypto as a whole As we have to trust they hold $118B in collateral without […]”, — write: businessua.com.ua
The transparency and structure of Tether’s business are cause for concern and bring back memories of the FTX collapse. This is stated in the thread of the founder of Cyber Capital, Justin Bones.
2/17) The potential for collapse here is greater than Terra Luna!
Making it one of the biggest existential threats to crypto as a whole
As we have to believe they hold $118B in collateral without proof!
Even after the CFTC fined Tether for lying about their reserves in 2021… pic.twitter.com/KoJFbyjRj1
— Justin Bons (@Justin_Bons) September 14, 2024
“[Tether] — one of the biggest existential threats to cryptocurrencies in general. We are forced to trust them, and they are holding $118 billion in collateral without evidence! Even after CFTC fined Tether for lying about its reserves in 2021,” the entrepreneur wrote.
Bones also noted that the stablecoin issuer has yet to conduct a collateral audit.
“However, the “auditor’s report” or “accountant’s report” is not an official document at all! Despite the statement, Tether has never provided its estimated reserves for a real unlimited evaluation by a third party,” the expert was outraged.
The organization’s purchase of a 9.8 percent stake in Latin American agricultural giant Adecoagro for $100 million in September exposed its management structure.
“There are only two people on the board of directors of Tether Holdings: Giancarlo [Девасіні] and Ludovicos [Ян Ван дер Венде]. This means that in 2024 the USDT reserves are still not split. Those two are in total control!” Bones commented.
In a comment to Cointelegraph, IDA Finance co-founder Sean Lee also expressed concerns about the company’s lack of transparency:
“Tether is structured like a business, and its persistence in rejecting the granular transparency that provides real trust from the community and institutional players is truly troubling.”
According to CoinGecko, USDT’s share of the stablecoin market has exceeded 75%, adding to such concerns. In two years, the indicator increased by 20%.
Li noted that a hypothetical collapse of the issuer could occur through its banking partners.
“The possibility of Tether’s collapse is not so much related to the movement of the market as to its structural connection with the underlying assets and TradFi. Otherwise, USDT would have suffered during the recent downturn. But instead, the USDC depeg arose due to the latter’s dependence on Silicon Valley Bank and Signature Bank,” the expert explained.
The publication reminded about the stability of the token in conditions of market turbulence. This was confirmed during the May 2022 USD untying of UST, when Tether converted 10 billion USDT to fiat within a week (over 12% of the supply at that time).
This contrasts with the situation surrounding Washington Mutual in 2008. Then the institution stopped its work after depositors withdrew deposits for $16.7 billion in 10 days.
The largest bankruptcies of US banks. Source: Pew Research Center
Intergovernmental expert on blockchain Anndi Lian did not support his colleagues. He doesn’t expect Tether to run into problems. In his opinion, large centralized structures can pose a risk to the industry.
It will be recalled that in September the company responded to a preliminary comparison with FTX and Alameda Research from Consumers’ Research Group. The USDT issuer emphasized its commitment to customer protection and compliance with regulatory requirements.
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