From the AG statement:
>Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie…
>…for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations.
>In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’
>… the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one
The AG’s statement was pretty clear in going much further than “strongly implying” there are actual serious problems with Tether’s backing claims.
https://ag.ny.gov/press-release/2021/attorney-general-james-...
I guess US regulators will know if Tether is really holding half its reserves in Treasuries (around $30bn). Of course that's not a 1:1 but it's also not 0.
I don't regard Tether's market cap as evidence in either direction for it's level of backing. And I'm not sure US regulators have a straightforward mechanism that would allow them to determine the amount for treasury notes held by Tether. TRACE may be mandatory for member OTC traders, but not necessarily automatic. Also TRACE data is available & even free for non-commercial use so if there was a clear way to use treasuries transaction data to determine ownership like that then I'm sure plenty of curious folks would have already verified exactly how much in treasuries are held by Tether.
Right now all people have is the assurance reports from BDO Italia which is a small & independent accounting firm. It's a member of the BDO network, and all of their websites seem to go on at some length about how none of them have any control over or liability for what others in the network might do. Out of any list of the largest accounting firms, the top 10, minus BDO, all seem to have much more control and formal structure regarding their network offices than BDO. Even were that not the case, one or another of these accounting firms pop up in the news on a fairly regular basis for bribery, money laundering, assistance in dodging sanctions, and so on.
And of course BDO Italia may be acting very professionally, collecting their fees and honestly looking at Tether accounts once a month to make sure everything is fine. Meanwhile Tether is using the same trick of transferring funds in & out, and may continue to do so up until the music stops and one day the BDO Italia rep shows up and has to write up a bad report. Or just gets fired before that can happen, or for being a little more curious because "We pay you to confirm the numbers you see right now, we don't pay you to confirm or think about any other numbers".
I just am constantly astonished at how a large number of crypto enthusiasts, cynical & distrusting of traditional finance, will essentially take Tether's word for it while if we were talking about Goldman Sachs and the BDO USA it would likely be torches & pitchforks.