A close friend of mine does banking in Nassau, Bahamas and works with Tether, and according to him Tether is where they sling all of their lowest rated junk chinese bonds.

He has been telling me to go nowhere near it for the last 5 years and I have not.

How has Tether prevented information leaks?

Ex-employee, whistleblower, service dependency, . . .

With billions at stake, there are highly motivated players. Similar to paying for dirt on mudge: https://news.ycombinator.com/item?id=32823548

I have seen detailing, possibly on HN, a few years back of how tether's asset base was fabricated. The report used intra-day banking movements to show that it was fiscally impossible for tether to be backing their assets at the rate they were minting using the banks they claimed. The report further correlated tether minting to Bitcoin price action. It showed in fairly clear and granular detail how tether was used to pump and subsequently dump Bitcoin and other cryptos. This was back at least 3 years ago. The pump and dump works to allow tether to profit enough to actually get the assets though. And it works until it doesn't. USDT can support Bitcoin price long enough for the minters of tether to extract USD for what they minted as long as their are other buyers getting in.

It is a traditional ponzi scheme but with an additional layer that makes it far more resistant. It's essentially the same thing as government central banking but for crypto and without the threat of violence to control valuations.

They only have seven employees.

Which beats the previous highest assets to employee ratio of Madoff.

I wouldn't be surprised if it were even worse than that, e.g. promissory notes from Bitfinex (themselves)

If it's good enough for the SSA why not for tether?

This will be a useful analogy if/when bitfinex gains sovereign power along the lines of the US government.

And the worlds largest military, and one of the worlds largest captive tax bases.

Cause Uncle Sam has a machine that can make portraits of George.

What are these dollar-denominated assets? US treasury bonds?

> US treasury bonds?

It’s hard to accumulate $100bn Treasuries without the dealers noticing.

From [1]

- U.S. Treasury Bills: $28,856,434,491

- Commercial Paper and Certificates of Deposit: $8,402,426,505

- Money Market Funds: $6,810,253,431

- Cash & Bank Deposits: $5,418,232,067

- Reverse Repurchase Agreements: $2,992,015,954

- Non-U.S. Treasury Bills: $397,150,678

- Corporate Bonds, Funds & Precious Metals: $3,486,896,735

- Other Investments: $5,551,836,303

- Secured Loans: $4,494,373,260

- Total: $66,409,619,424

[1] https://assets.ctfassets.net/vyse88cgwfbl/2xJyKdUKicdRUWpC9b...

Thanks for the reference. Although I'm not able to judge the validity of the report, looks like around half of Tether's assets (not necessarily half of their market cap) are held in dollar-denominated securities (T-bills and cash).

> US treasury bonds?

Would you accept the lowest rated Chinese junk bonds instead?

Asking for a friend…

No.

What are they then?

I believe Tether's claim is essentially "We can't tell you what dollar-denominated assets we're backed by, or get any competent auditors to sign off on our accounts, but the reserves are there. Trust us. Would a cryptocurrency company lie to you?"

Could be a piece of tissue paper with an IOU for a trillion dollars from Deadbeat Dan. Could be a deed to lovely waterfront property on the moon. Could be a controlling interest in Bitfinex. We don't know.

It's backed by Tethers.

They won't say.