What's backing USDT? Tether Reserves Breakdown

[Peter90]

The original idea was 1 USDT represents 1 $
so each USDT is backed by 1 $
Many investors thought that for each USDT on the market there was 1 $ in a bank account of Tether.



Tether assets backing all USDT's are audited quarterly by BDO Italia, part of BDO International, a major international auditing firm.
This is the result of the last audit report, dated September 2023





85.73% Cash & Cash Equivalents

Breakdown of Cash & Cash Equivalent:

76.44%  U.S. Treasury Bills
11.08%  Overnight Reverse Repurchase Agreements
0.88%   Term Reverse Repurchase Agreements
11.12%  Money Market Funds
0.4%    Cash & Bank Deposits
0.09%   Non-U.S. Treasury Bills


0.1%     Corporate Bonds

3.65%.  Precious Metals

1.92%   Bitcoins

2.61%.  Other Investments

5.98%. Secured Loans




https://tether.to/en/transparency/#reports

[Learn Bitcoin]

85.73% Cash & Cash Equivalents

Breakdown of Cash & Cash Equivalent:

76.44%  U.S. Treasury Bills
11.08%  Overnight Reverse Repurchase Agreements
0.88%   Term Reverse Repurchase Agreements
11.12%  Money Market Funds
0.4%    Cash & Bank Deposits
0.09%   Non-U.S. Treasury Bills

Forget about other percentages. The funds mentioned above sum 100.01% while the title says 85.73%. I don't know who is wrong. Either it's you or it's tether itself. Now, the question is, how should we verify that? Should we trust the auditors? Let's say we trust them. But what if Tether moved their funds right after the audit?

I am aware of such an incident. Crypto.com had an audit from an international audit company but later they transferred the funds from their reserve address. That was a crypto transaction and the address was public, which is why they were exposed. But, what about Tether?

[Peter90]

Forget about other percentages. The funds mentioned above sum 100.01% while the title says 85.73%. I don't know who is wrong. Either it's you or it's tether itself.

Total reserves

85.73%    Cash & Cash Equivalents
0.1%        Corporate Bonds
3.65%     Precious Metals
1.92%      Bitcoins
2.61%      Other Investments
5.98%      Secured Loans
--------
100%

Everything Ok, nobody wrong



Cash & Cash Equivalents

76.44%    U.S. Treasury Bills
11.08%    Overnight Reverse Repurchase Agreements
0.88%      Term Reverse Repurchase Agreements
11.12%    Money Market Funds
0.4%        Cash & Bank Deposits
0.09%      Non-U.S. Treasury Bills
--------
100%

Everything Ok, nobody wrong

[Wiseman]

Total reserves

85.73%    Cash & Cash Equivalents
0.1%        Corporate Bonds
3.65%     Precious Metals
1.92%      Bitcoins
2.61%      Other Investments
5.98%      Secured Loans
--------
100%

Everything Ok, nobody wrong



Cash & Cash Equivalents

76.44%    U.S. Treasury Bills
11.08%    Overnight Reverse Repurchase Agreements
0.88%      Term Reverse Repurchase Agreements
11.12%    Money Market Funds
0.4%        Cash & Bank Deposits
0.09%      Non-U.S. Treasury Bills
--------
100%

Everything Ok, nobody wrong

I remember that once discussed about the provision on another forum and people found information that the provision of about 50%, where do you have this information from and for what year, maybe something has changed as I saw other figures about 2 years ago.

[Peter90]

where do you have this information from and for what year, maybe something has changed as I saw other figures about 2 years ago.

Hi WM,
look at the end of the first posting, I put the link of the source 
(it's the website of Tether Gold)

[MrSpasybo]

We don't know if Tether had enough money a few years ago to support all USDT on the market, but there was a wave of withdrawals from Tether in mid-2022, about $20B, but Tether still had the ability to solve this problem easily.

Currently, Tether provides quite transparent audit records for community to check https://tether.to/en/transparency/#reports and Tether is still safe from attacks by many legal agencies. I think these agencies also want to find evidence to tie me to Tether but they can't yet, so we can only continue to follow this case.

[NikeFit_7777]

I think everyone has seen news like "Today we decided to block x-USDT address". Who knows, suddenly after a while they will block addresses without explanation (even if you have not violated anything). Decentralization is out of the question. Has anyone ever thought about that?

I wonder when if they blocked account с USDT who to write a letter to about the problem? 

P.S. Seems to me such an important topic to emphasize. Don't forget in situations like this it's worth considering different options for storing funds. Diversification, even in this case, must be present. 

[Zed0X]

The original idea was 1 USDT represents 1 $
so each USDT is backed by 1 $
Many investors thought that for each USDT on the market there was 1 $ in a bank account of Tether.

It's what they wanted us to believe at first until they got exposed.

Kudos to Tether for recovering after all that happened. Now they can continue to mint new USDT to flood the market and then burn the redeemed tokens Basically, a central bank operated by a private entity, and regulated by a Government.

~
Currently, Tether provides quite transparent audit records for community to check https://tether.to/en/transparency/#reports and Tether is still safe from attacks by many legal agencies.

Tether already settled the previous cases and part of that agreement is these transparency reports.

I think these agencies also want to find evidence to tie me to Tether but they can't yet, so we can only continue to follow this case.

Tie YOU? How did you get involved in this?

I think everyone has seen news like "Today we decided to block x-USDT address". Who knows, suddenly after a while they will block addresses without explanation (even if you have not violated anything). Decentralization is out of the question. Has anyone ever thought about that?

I wonder when if they blocked account с USDT who to write a letter to about the problem? 

P.S. Seems to me such an important topic to emphasize. Don't forget in situations like this it's worth considering different options for storing funds. Diversification, even in this case, must be present. 

The thread is about the assets backing up USDT and here you are talking about USDT freezing? That has nothing to do with the topic at hand.

[MrSpasybo]

I think everyone has seen news like "Today we decided to block x-USDT address". Who knows, suddenly after a while they will block addresses without explanation (even if you have not violated anything). Decentralization is out of the question. Has anyone ever thought about that?

I wonder when if they blocked account с USDT who to write a letter to about the problem? 

P.S. Seems to me such an important topic to emphasize. Don't forget in situations like this it's worth considering different options for storing funds. Diversification, even in this case, must be present. 

Tether is a USDT issuer, not a decentralized protocol on blockchain. I think this is normal because Tether must comply with anti-money laundering and terrorist financing regulations of countries, they coordinate with governments and projects to prevent the actions of hackers or bad/dangerous users.

Tether has thousands to millions of USDT holders, I don't think they want to create any negative events that affect their reputation and business. Up to now, we have not seen any organization or individual sue Tether for freezing their addresses, bad guys do not dare to appear in the light ^^

[NikeFit_7777]

Tether is a USDT issuer, not a decentralized protocol on blockchain. I think this is normal because Tether must comply with anti-money laundering and terrorist financing regulations of countries, they coordinate with governments and projects to prevent the actions of hackers or bad/dangerous users.

Tether has thousands to millions of USDT holders, I don't think they want to create any negative events that affect their reputation and business. Up to now, we have not seen any organization or individual sue Tether for freezing their addresses, bad guys do not dare to appear in the light ^^

I understand that they block scammers/those who have broken the law, etc. But have you ever thought about the following? Without any proof whatsoever. If they get in trouble themselves. They'll start indiscriminately blocking addresses - anyone.

Trusting them just because "USDT is used by millions of users" is not quite right in my opinion".

Who us will listen in such situations? Who do I text? It's best not to keep everything in one basket. Anything happens, I repeat, diversification even in this matter should be. It is purely the choice of each user. 

[Brewmaster]

Tether is a USDT issuer, not a decentralized protocol on blockchain. I think this is normal because Tether must comply with anti-money laundering and terrorist financing regulations of countries, they coordinate with governments and projects to prevent the actions of hackers or bad/dangerous users.

Tether has thousands to millions of USDT holders, I don't think they want to create any negative events that affect their reputation and business. Up to now, we have not seen any organization or individual sue Tether for freezing their addresses, bad guys do not dare to appear in the light ^^

I understand that they block scammers/those who have broken the law, etc. But have you ever thought about the following? Without any proof whatsoever. If they get in trouble themselves. They'll start indiscriminately blocking addresses - anyone.

Trusting them just because "USDT is used by millions of users" is not quite right in my opinion".

Who us will listen in such situations? Who do I text? It's best not to keep everything in one basket. Anything happens, I repeat, diversification even in this matter should be. It is purely the choice of each user. 

You raise a valid point about the potential risks associated with centralized stablecoins like USDT. While these stablecoins play a crucial role in the cryptocurrency market, concerns about transparency, regulatory scrutiny, and the possibility of indiscriminate blocking of addresses are valid considerations.

Diversification is a prudent strategy in any investment, including within the realm of stablecoins. Using multiple stablecoins and exploring decentralized alternatives like algorithmic stablecoins or those backed by diversified collateral can be part of a risk management approach.

In the event of issues or concerns, users may not have a straightforward resolution mechanism, highlighting the importance of understanding the terms of service and potential risks associated with the stablecoin issuer. Each user must assess their risk tolerance and preferences when choosing and utilizing stablecoins or other digital assets.

[NikeFit_7777]

You raise a valid point about the potential risks associated with centralized stablecoins like USDT. While these stablecoins play a crucial role in the cryptocurrency market, concerns about transparency, regulatory scrutiny, and the possibility of indiscriminate blocking of addresses are valid considerations.

Diversification is a prudent strategy in any investment, including within the realm of stablecoins. Using multiple stablecoins and exploring decentralized alternatives like algorithmic stablecoins or those backed by diversified collateral can be part of a risk management approach.

In the event of issues or concerns, users may not have a straightforward resolution mechanism, highlighting the importance of understanding the terms of service and potential risks associated with the stablecoin issuer. Each user must assess their risk tolerance and preferences when choosing and utilizing stablecoins or other digital assets.

Don't misunderstand me. I'm not trying to prove anything to anyone. I'm just stating my point of view. And I believe that even in any stablkion, there is absolutely no safety. That's why you have to be very careful. Just because usdt is number one doesn't give it anything.

P.S. Who knows what if tomorrow the American government wants to regulate it. What if tomorrow they told us to KYC everywhere? Nobody's asking that question. For this reason, it's better to diversify any risks = less problems. Understandably, the final decision always lies with each of us. 

[Peter90]

Currently, Tether provides quite transparent audit records for community to check https://tether.to/en/transparency/#reports

... and here we were wrong... (my bad...): What Tether provide are not audits but attestations  (whatever the difference between the two is).



Stark - former U.S. Securities and Exchange Commission internet enforcement office head - pointed out that Tether promised to commission a full audit within “months, not years” in 2021, which still has not happened.

An attestation, such as the one published this quarter, is typically more narrowly focused and does not provide an outside opinion on the company’s financial well-being.

https://cointelegraph.com/news/tether-boasts-of-its-financial-stability-after-strong-profits-money-moved-out-of-banks




Tether and parent company Bitfinex reached an agreement with the New York Attorney General’s office in February 2021 that required it to submit reserve reports quarterly for two years. Tether is reportedly working on a real-time reserves reporting system that may appear in 2024.

Tether has faced criticism for its nontransparent accounting practices, and it received the second-lowest rating in S&P Global’s stablecoin stability assessment.

While it has had attestations, the stablecoin issuer has never been audited and has been the target of rumors and speculation about its financial state. Its last attestation report was released on Oct. 31, 2023.

https://cointelegraph.com/news/cantor-fitzgerald-head-tether-reserves-they-have-money



So, no audits, only attestations.

Plus, Tether had promised to the authorities audits, in 2021.
We are in 2024, still no audits.

[Peter90]

Reserves Breakdown at 31.12.2023

[Peter90]

Whether the Tether stablecoin (USDT) has been fully backed with reserves has been a question for years. In 2019, skeptics were vindicated after the New York Attorney General’s office announced there was a roughly $850 million hole caused by Tether loaning funds from its reserve to Bitfinex, its sister company. Still, Tether claimed it had patched the hole and was fully backed again in the years following that announcement.

coindesk.com

So not only - contrary to the belief of many USDT users and investors - USDT wasn't backed by USD, but there is proof that almost once USDT wasn't even 100% backed by Tether's reserves