Cyber Capital founder calls Tether a $118B Fraud, bigger than FTX and Madoff

Cyber Capital founder Justin Bons has criticized stablecoin issuer Tether, labeling it an “existential threat” to the crypto industry. Bons believes Tether is a $118 billion fraud, larger than FTX and Madoff’s crypto scandals.

In a string of posts on X, Justin Bons tagged Tether as the largest fraud in crypto history, warning of its failures and the threat it poses. He even advocated for people to halt their purchases of Tether’s token, USDT, saying the platform has never had a formal audit and has been on fire for document falsification and identity concealments.

Cyber Capital founder Justin Bons warns of Tether’s transparency issues

In one of his posts, he said :

Tether is a 118 billion dollar scam; bigger than FTX & Bernie Madoff combined! No proof of reserves & an audit has never been done; USDT is printing counterfeit money (fraud). Caught falsifying documents, obscuring identities & lying about reserves. Stop using USDT now!

~Justin Bons

Bons also remarked that Tether’s risk of collapse surpasses that of Terra Luna. He expressed concern over the lack of proof for their claimed $118 billion in collateral and noted that the CFTC had even fined Tether in 2021 for falsely representing their reserves. 

He also asserted that the platform has never undergone an audit, despite its 2015 commitment. He alleged that the firm hired for the first audit attempt in 2018 was dismissed for being “too thorough”.

Then again, he said that while Tether had publicized an auditor report in 2021, he argued that it was more of an accountant’s report and did not count as a formal audit.

The Cyber Capital founder even raised concerns about Tether’s core team, noting that the platform claimed to have between 11 and 50 staff members, which he labeled a ‘red flag’. He further explained that a detailed examination of the listed names revealed major inconsistencies, suggesting the actual number might be closer to 11.

Tether has been dealing with criminal allegations

In August 2024, Celsius Network Ltd. accused Tether of fraud involving over $3.5 billion. The company initiated legal action in the U.S. Bankruptcy Court of the Southern District of New York, asking Tether to give back over 57428 BTC. However, Tether CEO Paolo Ardoino dismissed all allegations, terming the lawsuit ‘baseless’.

The case revolves around a loan agreement signed between the two in 2022 that allowed Celsius to borrow stablecoins from Tether. Celsius claims that when the crypto market crumbled around mid-2022, Tether covered its losses by making fraudulent Bitcoin transfers.

Besides, Bons has called out the firm for having founders tied to illegal Ponzi schemes and gambling hubs. He even mentioned that Tether’s founders had ties to Bitfinex’s bank, Crypto Capital, a Panema-based offshore bank with strong links to organized crime.

In 2021, Tether paid the US Commodities Futures Trading Commission over $41 million in fines, which Bons claimed was a settlement to wrap up an inquiry into a purported $850 million loss involving mixed client and corporate funds.