At CoinGeek, we’ve been yelling from the rooftops for years thatTetheris a scam and will someday cause the biggest crash in the history of the digital currency industry.
Today, I will show you solid evidence that Tether is at best dishonest and is potentially the biggest scam in history. Either way, it isn’t safe to keep your funds in thisstablecoinfor any length of time. Is Tether safe? Hell no!
Is Tether backed?
When it comes to stablecoins, the number one question anyone should ask is the following: is this backed by real cash or cash equivalents?
For example, take GUSD issued byGemini. It’s relatively simple to verify it is backed because they keep actual U.S. dollars in a bank account in New York, and it’s audited and checked monthly. I’m not saying Gemini is perfect by any means, but this illustrates how easy it is to prove your stablecoin is backed and how one company does so.
However, we see a very different story when it comes to Tether. Tether claims it is backed bycommercial paper, but it won’t reveal any details. Investigators like Bitfinex’ed on Twitter have repeatedly pointed out that there’s no legitimate reason for Tether to hide this information. Its claims that this obfuscation gives it some competitive edge are nonsensical.
Tether: Our commercial paper is safe.
Critics: Cool. Can we see what it is?Tether: No, because then it won't be safe anymore. They're Quantum Reserves in superposition and observing them causes a wave function collapse and the reserves become unsafe, hence no auditing. https://t.co/vBRJSPMbsO
See AlsoTether (USDT) Wallet | Buy, Sell, Trade, UseTP-Link Tether App (for Android) ReviewHow to Transfer Tether USDT to Your Bank Account In NigeriaHow to Buy Tether (USDT) with Fiat | Transak— Bitfinex'ed 🔥🐧 Κασσάνδρα 🏺 (@Bitfinexed) February 4, 2022
Why will Tether not just show us what backs the USDT stablecoin? As a matter of fact, why can’t it simply be real U.S. dollars in a regulated bank account? Tether watchers have asked these questions for years, and there’s no good answer. Unless Tether is hiding something, which you’ll soon see is a common theme with this company, then why not just come out and show the public the goods?
Things that make you go hhhhhhhmmmmmm… right?
Who is Tether’s CEO?
Tether’s CEO is called Jan Ludovicus van der Velde. He’s allegedly based in Hong Kong, but despite being the boss of a firm in charge of issuing a stablecoin with a peak market cap of $68 billion, he sure keeps a low profile.
Mr. van der Velde has never been seen by anyone in the industry and does not give interviews. Go ahead and do a Google or YouTube search for him and see what you can turn up. I’ll bet you don’t find anything. This guy is a ghost!
Isn’t it a little strange that a company that claims to havemore cash or cash equivalents than Appleis literally invisible? Come to think of it, where would an offshore company even keep so much cash or so many bonds, and how would they accumulate them without anyone verifying where they bank?
Oh, and in case you’re thinking that Tether’s CFO would be able to clear all of this up in an instant, think again. He’s called Giancarlo Devasini, but nobody knows much about him, either. Like his boss, he gives no interviews and keeps an extremely low profile. The former plastic surgeon even deleted his Twitter account after Bloomberg wrote an article asking ifanyone had seen Tether’s billions.
Tether fines and investigations
By now, you should be wondering if Tether is legit, given its history of obfuscation and muddying the waters. This section will go further and prove that Tether doesn’t just hide things; it outright lies and has been kicked out of New York State for its dishonesty.
In February 2021, Tether and Bitfinex wereordered to pay $18.5 millionby the New York Attorney General’s office. What did they do to deserve this fine? They commingled client and corporate funds to cover up a massive $850 million loss and lied about it. On top of the financial penalty, Tether was booted out of New York State andordered to fileregular transparency statements.
Then in October 2022,Tether was fined $42.5 millionby the U.S. Commodity Futures Trading Commission (CFTC) for lying about its reserves. The CFTC said it made “misleading” and “untrue” statements and “omissions of material fact” while managing USDT over the years. The CFTC found that, despite claiming to be fully backed, Tether was only backed 26% between 2016 and 2018. If you want to know if you can trust Tether’s claim to be fully backed, there’s your answer.
Yet, that’s not all. As I write this, the U.S. Department of Justice (DOJ) is reportedlyinvestigating several Tether executivesfor bank fraud. While nothing has come of this yet, the DOJ doesn’t just start probing for the heck of it. I’ll update this post when the investigation concludes.
Has Tether ever been audited?
This is a fair question. You would expect a decent audit from a company that, at the height of the most recent bull market, was supposedly holding bonds and notes worth more than $68 billion.
Yet, despite repeatedly promising to release a full audit for years, Tether has never made good on that promise. Tether counselStuart Hoegnerinsists an audit is ongoing, but he won’t name the auditor and shrugs off the fact that auditor Friedman LLP walked away without completing the Tether audit it was supposed to.
Will we ever see the promised Tether audit? This seems to contradict Tether’s own statements thatkeeping its reserves secret is essentialto its survival as a company. How can a company prepare a detailed audit while also stating that it can’t show the public its books?
Is Tether a scam?
Is Tether backed, or is it literally an outrightPonzi scheme? It’s impossible to say for sure, but given the company’s track record of dishonest behavior, outright lies, and cover-ups, you’d do well to steer clear of it. If the information outlined in this article, all of which is verified, isn’t enough to cause you to think twice before using USDT, I can’t help you.
At the very least, this shady offshore firm has, in the past, lied that it was fully backed. Given this, why would anyone believe them now when they have not supported their claims with evidence despite being given many chances to do so?
Give USDT a miss and use one of the more reputable stablecoins instead. Or better yet, avoid the ‘crypto casino’ and create some real value instead!
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