Tether’s lack of third-party audits is raising investor concerns about a potential FTX-like liquidity crisis from the $118 billion stablecoin giant.

Investor concerns are mounting around Tether, the issuer of the world’s largest stablecoin USD₮ (USDT $1.00).

Cyber Capital founder Justin Bons, who shared his concerns about Tether being a potentially bigger scam than FTX, catalyzed the latest wave of concerns.

Bons wrote in a Sept. 14 X post:

“[Tether is] one of the biggest existential threats to crypto as a whole. As we have to trust they hold $118B in collateral without proof! Even after the CFTC fined Tether for lying about their reserves in 2021.”

In 2021, the United States Commodities and Futures Trading Commission (CFTC) fined Tether a $41 million civil monetary penalty for lying about USDT being fully backed by reserves.

Concerns over the stablecoin giant’s influence over the crypto space grew louder recently after data revealed that Tether’s market share surpassed 75% of the entire stablecoin market after a 20% increase over the past two years.

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A hypothetical Tether implosion would be banking-driven, unlike the FTX collapse

Part of the concerns are fueled by one of the industry’s most notorious black swan events, the collapse of the FTX exchange, which led to $8.9 billion in lost user funds.

While FTX’s collapse was due to its inability to honor mass customer withdrawals of $6 billion within three days, a hypothetical Tether implosion would be related to its banking partners, according to Sean Lee, the co-founder of IDA Finance.