According to Bloomberg, Tether earned at least $6.6 million in interest between January 2018 and July 2018, based on bank statements it had seen.
An investigative report by Bloomberg News has revealed that Tether makes a large amount of interest on its US Dollar reserves. These reserves are kept in banks across several jurisdictions including the Bahamas, Canada and Puerto Rico.
The Commodities Futures Trading Commission (CFTC) issued a subpoena to the company amidst doubts about the veracity of its cash reserve claims. In the wake of this, a number of competing Stablecoins began popping up, including some marketing themselves as the fully audited and regulated ‘anti-Tether’.
The report provides some of clues into how Tether operates. However, the current status of the company’s finances remains a mystery. Tether still refuses to allow its cash reserves to be audited and the bank statements seen by Bloomberg say nothing about how much Tether has in its reserve accounts. The report only shows that Tether Ltd. has transferred USD and received USDT.
“That pattern shows up in the information Bloomberg reviewed. On July 6, Bitfinex sent 100 million digital coins to Tether Ltd., according to the blockchain. The same day, Tether paid Bitfinex $100 million, a Noble bank statement shows.”
Tether could still be running a fractional reserve system as famously alleged by a number of anonymous critics earlier this year, notably on twitter. Until a comprehensive audited is commissioned, it remains impossible to discount this theory in its entirety.
If you combine this with the fact that Tether effectively operates as a type of bank for crypto exchanges with no fiat banking, this leaves a portion of the crypto market which is dependent on Tether to achieve liquidity could be severely impacted if Tether is overstating its cash reserves.
It will also not be lost on USDT users that the interest payments detailed in the bank statements seen by Bloomberg indicate that Tether was profiting from its cash reserves at the same time that uncertainty over their size and existence was causing its market price to slip.