Ex-SEC Official Calls Tether USDT A Ponzi House of Cards Scheme

• John Stark believes USDT issuer is a Ponzi scheme.
• WSJ’s reporter claimed Tether doesn’t publish audited financial statements.
• Tether’s financial statement shows a $2 billion increase in USDT loan issuance.

John Reed Stark, a former chief internet enforcement officer in the US Securities and Exchange Commission (SEC), has described Tether, the issuer of the largest stablecoin USDT, as a Ponzi scheme.

Stark called Tether a Ponzi scheme while reacting to an interview by CNBC with the company’s co-founder Reeve Collins, asking about its reserve. The ex-SEC official believes Tether’s ‘lack of responsiveness’ make him the Web3 firm ‘is a house of cards.’

Previously, Wall Street Journal (WSJ)’s reporter Jonathan Weil alleged that Tether doesn’t publish audited financial statements or a complete balance sheet, leaving outsiders with an incomplete picture of the company’s financial health.

Peter Crane, president of Crane Data, added that he has been very skeptical and in disbelief that Tether could get away with the lack of disclosure and limited transparency. Therefore, CNBC challenged co-founder Collins to answer the allegations of lack of transparency.

Collins responded:

In the last eight years of Tether’s operating history, they’ve always redeemed every token for exactly one dollar. The company has continued operating in the industry’s best risk mitigation tactics.

Furthermore, he added that given the recent fallout of the FTX, the probing questions the crypto community asks about Tether’s financial health are okay. Additionally, Tether publishes timely financial statements about its reserves.

According to a recent consolidated reserve report by Tether has reached a two billion dollar increase in loan issuance from December 2021. The official financial document reveals that the company hit $6.1 billion in secured loans as of September, representing 9% of its total assets, compared to the $4.1 billion at the end of 2021.