What is Tether backed by?

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Deltec Bank, the Bahamas-based bank that Tether uses, recently announced that they use their customers’ funds to buy BTC. 

We’ve maintained a very significant position in the beneficiaries of maximum monetization so that does include gold, it includes other commodities as well. it also includes a large position in BTC which has obviously received a lot of attention recently. We bought BTC for our clients at about $9,300, so that worked very well through 2020 and we expect it to continue working well in 2021 as the printing presses continue to run hot,

said Deltec Bank chief investment officer Hugo Rogers–and as soon as that video began to circulate, many people began to wonder if Tether, who is one of Deltec Banks customers, is actually backed by USD or if they are really backed by a significant amount of BTC.

It is important to note that even though Deltec says it buys BTC for its clients, they did not say which clients of theirs that they buy BTC for. It is also important to note that Tether is not Deltec Banks only crypto-customer; the digital currency exchange FTX also banks with Deltec.

Tether’s response

Stuart Hoegner, the General Counsel for Tether, released a statement shortly after the video from Deltec Bank made its rounds. According to Hoegner, Tether does not influence how Deltec uses the money it receives.

We are aware of recent statements by Deltec Bank & Trust Limited about the purchase of digital tokens for and on behalf of their customers. @Tether_to does not outsource decisions about its reserves. Deltec does not purchase digital tokens for and on Tether's behalf.

— Stuart Hoegner (@bitcoinlawyer) January 15, 2021

Tether’s reserves have always been a hot button issue across the digital currency space. It is often called into question whether the Tether in circulation is actually backed by US dollars; at the moment there are 24.2 billion USDT in circulation–and 55% of all USDT in circulation were minted within the last 90 days.

The clock is ticking

It is only a matter of time until we find out whether Tether is legit or if it’s a house of cards that is being used to perpetually keep the BTC market afloat. Tether is currently involved in a fraud investigation that is being conducted by the New York Attorney General’s office and the truth will come out sooner than later.